ESMA published the final draft regulatory technical standards setting out the new European Single Electronic Format (ESEF). Starting from 2020, this format shall be used by all issuers to prepare their annual financial reports. ESMA also published a reporting manual and detailed instructions to issuers to facilitate the implementation of these standards. The publication of the regulatory technical standards is accompanied by the launch of a new webpage on the ESEF. Once implemented, ESEF could serve as a potential reference point for further EU-wide initiatives to make company data more comparable, transparent, and digitally accessible.
Starting in 2020, all annual financial reports shall be prepared in XHMTL. This format can be opened with standard web browsers and can be prepared and displayed, depending on the preferences of an individual issuer. Where the annual financial report contains IFRS consolidated financial statements, these shall be labeled with XBRL tags, making the labeled disclosures structured and machine-readable. This facilitates software-supported analysis and comparison of different reports, granting investors a key tool to support their investment decisions. Furthermore, as XBRL taxonomies can contain labels in several languages, users can compare numerical information in the financial statements across issuers, even though the issuers prepare their financial statements in different languages.
In addition to that, for individual users of financial data, the machine-readable XBRL information is easily transformable to other formats such as SQL or Excel, avoiding onerous manual re-keying. The XBRL tags will be embedded in the XHTML document using Inline XBRL. To allow for structured electronic reporting using XBRL, ESEF uses an extension of the IFRS Taxonomy, issued by the IFRS Foundation. This taxonomy provides issuers with a set hierarchical structure to be used to classify financial information. ESMA has submitted the final report to EC, which has three months to decide whether to endorse the technical standards.
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