The obligation to prepare annual consolidated financial statements in the European Single Electronic Format (ESEF), will come into force soon. This means that annual consolidated financial statements for which the reporting period begins on or after January 1, 2020 must be prepared in accordance with the XBRL standard. The obligation will apply to all companies listed on stock exchanges in the European Union.
To prepare the report properly, you will need an IT tool that will allow you to generate files according to new guidelines. Comarch has already introduced the dedicated Comarch ESEF application to its offer. The system is currently available in the cloud version. You can also see a demo of the application that is equipped with the basic functionalities necessary to prepare reports. A desktop version (installed on client servers) will be launched in June this year.
Knowledge based on experience
In work on the application for reporting in the ESEF format, Comarch draws on the experience of its own employees who carry out activities in the field of preparing financial statements, investor relations, financial reporting and financial controls on a daily basis. As a company listed on the Warsaw Stock Exchange, Comarch will also be required to prepare consolidated financial statements according to the new requirements. The company intends to transform its consolidated financial statements published for 2019 to the iXBRL format a year before the new requirements enter into force, using the Comarch ESEF application. The transformed financial statement will be available on the company's website in the first half of 2020.
- We believe that approaching ESEF issues in advance will allow us to prepare the first mandatory consolidated financial statement in iXBRL in 2021, calmly and trouble-free. That is why we decided to take part in workshops organized by the European Securities and Markets Authority, and we will transform the annual consolidated financial statements for 2019 into iXBRL now. To prepare the statements, we will use Comarch ESEF software, which, thanks to the cooperation of our department with a team of IT specialists, is an ergonomic and intuitive tool - says Agnieszka Pasich from the Investor Relations Department at Comarch.
In 2017, Comarch employees had the opportunity to gain experience by taking part in workshops organized by the European Securities and Markets Authority (ESMA), the unit responsible for developing regulations on a uniform electronic reporting format in the European Union. Comarch, as one of the few Polish listed companies involved, participated in the activities of the EU institution whose task was, among others, practical assessment of regulations being created in the scope of ESEF. Based on the conclusions drawn during the practical tests, ESMA refined and finalized the ESEF project.
- Combining the experience gained during tests by the Comarch financial reporting team with the knowledge of the production teams of Comarch ERP systems used by tens of thousands of companies in Poland, Germany, France and Spain has allowed the development of an application for reporting in accordance with ESEF standards, for companies listed on stock exchanges in all European Union countries – says Paweł Krupa, the product manager of Comarch ERP systems.
List of functionalities
The Comarch ESEF application allows users to create financial statements in line with the ESEF guidelines. The data for the report can be imported from a document saved as a DOCX file. This functionality allows the entire structure/view of the report to be transferred to the application. Then, if you need to change the report, you can edit the financial statements directly in the application.
- The Comarch ESEF tool becomes a data editor from the moment of importing the DOCX file to the application, as the application allows access to reports, data editing and tagging-related editing. Therefore, Comarch ESEF is a tool for managing financial reports at all levels. It is therefore not dependent on third-party data editing software. It is an independent, future-proof solution – explains Paweł Krupa.
The software has a built-in set of the latest ESEF taxonomy tags, a glossary of terms used to mark data in XBRL reports. They can be assigned to data in the financial statements, and the dictionary itself can be easily supplemented with new extensions. Additionally, the report can be searched in an intuitive way using the taxonomy tree.
- Tagging the position of the report in our application brings real time savings in the long term. Once marked, data can be transferred to documents prepared in subsequent years. In this way, the creation of reports from year to year will be much less time-consuming – adds Paweł Krupa.
The Comarch tool currently has many useful features, and the application itself is available through a web browser (both in cloud and desktop versions). In this way, individuals in financial reporting departments have quick and, most importantly, secure access to the reporting data without having to install software on every device.
- We are in constant contact with our financial reporting department of Comarch SA, and with many clients and consulting companies that communicate our ESEF needs. Thanks to this, we plan, for example, to make it possible for multiple users to work simultaneously on reports in the application or to use a spreadsheet to supplement report data – points out Paweł Krupa.
Benefits for the capital market
The results of ESEF reporting will be available to all capital market participants, including joint stock companies, investors and stock market analysts, as well as supervisory authorities (for example, the Financial Supervision Authority in Poland). For each of these groups, the ESEF format offers a number of benefits, which are mainly based on the increased usefulness of financial information. For joint stock companies, the most important benefit is the structuring of data, and thus reducing the probability of errors. In turn, investors and stock market analysts will have access to structured information. The new format will significantly improve their work, which consists mainly of collecting, processing and analyzing data. ESEF reporting also means greater transparency and accuracy of data.
- It is worth remembering that we live in a rapidly changing legislative environment, which has a huge impact on information systems. It is no different for Comarch ESEF - we are constantly monitoring changes in the ESEF while analyzing the reporting behavior of local regulators under this new formula. All this to ensure that our tool, apart from its rich functionality, meets all formal conditions – adds Paweł Krupa.
The application allows you to work in six languages (Polish, English, German, Spanish, French and Italian), so it can be used by companies operating in other European Union countries or in the international environment.
Currently, the Comarch ESEF application is available in the cloud version. A desktop version will be launched in June this year. In addition, new functionalities will appear in subsequent updates. These will include increased editing capabilities (including visual changes in the report), report export to XHTML, report validation in the application, the previously mentioned possibility for multiple users to work on a report at the same time and fill in the data in the application with the help of a spreadsheet, and building a different language version of the financial report.