ESEF: A New Requirement for Issuers of Securities in the European Union

New Format of Annual Reports

ESEF or the European Single Electronic Format is a new requirement concerning the form in which the annual financial reports of companies listed on stock markets in Europe must be prepared.

The requirement applies to all Issuers from the European Union whose securities have been admitted for trading on a regulated market within the EU. In Poland, for example, this applies to companies listed on the Warsaw Stock Exchange. 

The Comarch ESEF application is a tool for generating financial reports which comply with the latest requirements

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What Does Reporting in ESEF Require?

  1. All annual financial reports compiled by issuers must be prepared and published in XHTML format — which makes it possible to read each report type with any standard web browser.
  2. Consolidated financial statements prepared in accordance with the IFRS (International Financial Reporting Standards) will be marked up/ tagged using XBRL markup language:
  • The proper display of the XBRL statements in a web browser will be possible with the Inline XBRL standard specification.
  • Taxonomy, i.e. a dictionary for tagging data in the statements in the XBRL standard, is based on the IFRS
  • Starting from January 1, 2020, the basic elements of the financial report (all elements except additional information) will be tagged in detail. From January 2022, additional information tagging will apply.

ESEF Reporting types

When Does the Obligation for ESEF Reporting Begin?

ESEF will be applied for annual financial reports beginning from 2020. This means that the first statements in the new form will be submitted at the beginning of 2021
This date might seem distant, but there’s not much time to prepare for the new rules. The level of knowledge and practice related to the XBRL standard is relatively low in some EU countries, particularly those in which this standard is not common.

Paweł Krupa
FK/HR Systems Product Manager at Comarch SA

Benefits of Reporting in ESEF

The introduction of the European Single Electronic Format gives a number of multidimensional benefits that are mainly based on increasing the comparability and usability of financial information

For listed companies

The most important benefits are associated with a reduction in the number of errors in reported data, and in the possibility of analyzing financial data of other companies in order to use them for internal purposes.

For investors

This group will gain access to structured information — i.e. the ability to process the most important financial information quickly and comprehensively. This is crucial for financial analysis, as investors will be able to devote most of their time to analysis itself, rather than collecting data.

For supervisory bodies

When creating a report in XBRL format, users will be informed about any errors or comments thanks to a number of validators. ESEF reporting will lead to greater data transparency and the ability to quickly analyze not only individual companies, but also the entire capital market. Unification of the structure of creating financial reports of companies listed on European stock markets will increase the certainty as to the correctness of the data.

Comarch in International ESEF Tests

The European Securities and Markets Authority (ESMA) is responsible for developing regulations regarding the uniform electronic reporting format in the European Union. In 2017, ESMA conducted tests aimed at the practical assessment of regulations being developed in the field of ESEF. Based on the lessons learned during these tests, ESMA refined and finalized the ESEF project.

Comarch SA was one of the 25 issuers from the European Union participating in the tests (Comarch SA shares are listed on the Warsaw Stock Exchange). Participation in the tests allowed Comarch to become familiar with the ESEF-related regulations and guidelines that were emerging at that time.

Experience gained during tests, and exemplary communication between the Comarch Financial Reporting teams and the Comarch ERP system production team, allowed us to develop a logical design of the new Comarch ESEF application, the use of which will help companies across the European Union meet new reporting requirements.

Comarch SA will present its financial report for 2019, created using the Comarch ESEF application, in iXBRL format, a year earlier than required by the new regulations.

More about ESEF on the ESMA websites>

ESEF tests with the participation of Comarch SA >

Financial reports in XBRL allow you to store tags/data about a selected item of a given financial report.

Each item in the statement can be marked/tagged. Such items may include the following information:
  • IFRS taxonomy entry (dictionary entry)
  • Period to which a given value applies
  • CurrencyRounding (e.g. amount in thousands or millions)
  • Name of the entity to which the data relate.

Sign up for Comarch ESEF demo

The demo will be released in December 2019

Please leave your company name and your e-mail address and we will notify you about Comarch ESEF demo availability.

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