European Single Electronic Format
European Single Electronic Format
The European Single Electronic Format is the electronic reporting format in which issuers on EU regulated markets shall prepare their annual financial reports from 1 January 2020.
In 2013 the Transparency Directive, which sets rules on harmonisation of transparency requirements of issuers, was amended to include, amongst others, a requirement for issuers to prepare their annual financial reports (AFRs) in a single electronic reporting format. ESMA was assigned the responsibility to develop regulatory technical standards (RTS) to specify this electronic reporting format.
The objectives of the provision are to make reporting easier for issuers and to facilitate accessibility, analysis and comparability of annual financial reports.
What is ESEF?
The RTS on ESEFwill apply to all issuers subject to the requirements contained in the Transparency Directive to make public AFRs.
The ESEF requires that:
- All AFRs shall be prepared in XHMTL, which is human readable and can be opened with any standard web browsers;
- Where AFRs contains IFRS consolidated financial statements, these shall be labelled the XBRL ‘tags’, which make the labelled disclosures structured and machine-readable;
- The XBRL ‘tags’ shall be embedded in the XHTML document using the Inline XBRL technology, which allows the benefits of XBRL tagged data to be combined with the human readable presentation of AFRs;
- A taxonomy provides the hierarchical structure used to classify financial information and is essential for structured electronic reporting using XBRL. The taxonomy to be used for ESEF is an extension of the IFRS taxonomy. The schema of the core taxonomy is included in Annex to the RTS. Furthermore, XBRL technical taxonomy files compliant with all relevant technical and legal requirements are published on ESMA’s website to provide guidance to issuers’ in creating their own entity-specific taxonomy;
- Preparers shall mark-up disclosures using the taxonomy element having the closest accounting meaning to the marked up disclosure; if the closest taxonomy element misrepresents the accounting meaning of the disclosure, issuers shall create a so-called extension taxonomy element and anchor such extension to the core taxonomy element that has the closest accounting meaning.
- Primary financial statements (income statement, balance sheet, statement of cash flows and statement of changes in equity) shall be marked up in detail; the Notes instead will need to be marked up by applying mark-ups for whole sections of the notes (block tagging).
The detailed provisions of the ESEF are contained in the RTS on ESEF included in the Final Report on the RTS on ESEF.
ESMA published in June 2020 an example of annual financial report which is prepared in the new European Single Electronic Format, i.e. in line with the requirements included in the RTS on ESEF and with the guidance set out in the ESEF Reporting Manual (as updated in July 2019). You may find it at this link.
How to implement ESEF
ESEF Reporting Manual
ESMA prepared an ESEF reporting manual to provide guidance on common issues encountered when generating Inline XBRL instance documents.
The purpose of this document is to promote a harmonised and consistent approach for the preparation of annual financial reports in the format specified in the RTS on ESEF.
ESEF Video tutorials
In order to inform all relevant market participants of the new requirements set out by the ESEF regulation, ESMA has published video tutorials summarising the key requirements of the ESEF regulation and providing support in their implementation:
- First video tutorial on ESEF : An introduction to the RTS on ESEF
Follow tutorial 1 with the script
- Second video tutorial on ESEF: Implementation support for preparers: how to prepare an Inline XBRL report
Follow tutorial 2 with the script
- Third video tutorial on ESEF: Further implementation support for preparers. This video tutorial answers ten questions which are frequently asked by market participants to ESMA and National Competent Authorities on the ESEF Regulation.
Follow tutorial 3 with the script
ESEF XBRL Taxonomy files
The taxonomy to be used for ESEF is based on the IFRS Taxonomy, prepared and annually updated by the IFRS Foundation, and provides issuers with a hierarchical structure to be used to classify financial information.
The human-readable labels of the core ESEF taxonomy, listing and defining the specific elements that preparers can use to identify (‘tag’) the information disclosed within IFRS consolidated financial statements, are included in Annex VI of the RTS on ESEF. The ESEF XBRL taxonomy files are a set of electronic files providing a structured representation of the elements that substantively constitute the core taxonomy. These can be accessed on ESMA’s website in the form of a taxonomy package prepared in accordance with the XBRL Taxonomy Packages 1.0 specification . The package includes entry points in all EU language. All files within the taxonomy package are also available at their canonical locations, hosted on the ESMA website.
ESEF Conformance Suite
The ESEF Conformance Suite is aimed primarily at a technical audience (i.e. XBRL software developers), as a way to test and provide assurance on whether software tools are able to create and / or consume filings which are in line with all ESEF requirements. In particular, the Conformance Suite permits to determine if a software is able to detect and flag infringements to the ESEF requirements contained in a filing.
The Conformance Suite builds on the rules and guidance set out by the ESEF Regulation and the ESEF Reporting Manual. It consists of 214 packages grouped into 71 tests, packaged in a zip file. It is accompanied by an Excel file which describes the rules and guidelines and the test cases, together with the expected error codes in case of incompliance. For each identified rule and guideline there is at least one valid and one invalid test case.
When will the ESEF come into force?
Subject to the completion of the legislative process by the European co-legislators, the ESEF will enter into force on the twentieth day following that of its Publication in the Official Journal of the European Union and will apply to AFRs containing consolidated financial statements for financial years beginning on or after 1 January 2020.
Find out more about ESEF
To assess whether the proposed specifications for ESEF were practicable and to determine if and to what extent they had to be improved, ESMA carried out field tests in summer 2017.
In these field tests, ESMA supported 25 volunteer issuers to transform their IFRS consolidated financial statements to Inline XBRL. ESMA published a number of the reports created in the course of the field tests to allow market participants to familiarise themselves with the Inline XBRL technology. These reports and more information on the field tests can be found on the field tests webpage.
A report on the field tests is included in the Final Report on the RTS on ESEF.
In the course of the development of the RTS, ESMA carried out a public consultation. The Consultation Paper was published in September 2015. The Feedback Statement on the consultation published in December 2016 summarises the feedback received and ESMA’s response to it. Furthermore, it contains a cost-benefit analysis for ESEF.