Unlike previous shifts in reporting, ESEF is not about improving content, it is about the digital format that the annual report must be provided in. Long term it could help drive improvements in the creation and distribution of reports and the way they are made available to audiences, and there are be a number of approaches which companies may take which meet the requirements.
What is ESEF?
ESEF is a new electronic annual report format requirement – a digital version of the annual report with ‘tagged’ content which is machine readable. The new format will enable some specialist audiences to automatically read data from your report, while also allowing people to still read the report in a web browser.
Despite reporters’ concerns about this requirement, with the right tools and preparation, the tagging should be efficient to implement alongside established processes.
The basic requirements
- The full annual report will need to be filed in XHTML format, with machine readable iXBRL tagging applied to primary financial statements (for 2020 reports) and the notes to the accounts (for 2022 reports)
- The iXBRL tags will follow the ESEF taxonomy, which is closely aligned to existing IFRS taxonomy
- The report will be considered the main filing under the Transparency Directive, and it is expected that the report will be subject to audited, and have to be ‘filed’ at the same time as the PDF, online and printed report launch.
- Alongside ESEF, all current UK requirements will still need to be met (including print for shareholders who request it). This may change when the FCA and FRC confirm the mechanism and requirements in the UK.
Our view – driving better reporting
We don’t think ESEF should result in less communicative digital reporting. Instead we believe that it can help accelerate the wider digital reporting opportunity for companies. ESEF could play a major role in improving digital corporate comms. Alongside the increased use of rich media, like video and interactive content, digital reporting has the potential to better engage online audiences with a company’s story.
ESEF is an additional format and enables greater digital data analysis. It should complement, not sacrifice the excellent strategic, risk and governance communication currently featured in reports that is valued by many audiences.
Our solutions
Despite the precise UK requirements not yet being fully defined, we now know enough to be able to offer solutions.
There are a number of ways to approach the challenge, and a range of tagging tools and services offering ESEF compliant outputs that companies will be able to choose from. They offer differing levels of capability and mixed levels of integration with design tools.
At the most basic level there are specialist companies that can provide post-production tagging on reporting content in plain text and table format – a conversion process. At the other end tools are now available that enable reports to retain advanced design and communication within the ESEF format – an integrated process.
This means that ESEF reports can still retain the high level of communication UK companies have achieved in their strategic, governance and risk reporting for many years.
At Friend we are offering simple and cost-effective solutions for ESEF. These solutions will enable us to adapt to our clients’ different processes, IT and accounting systems, and also meet their digital reporting ambitions.
If would like to discuss your reporting and ESEF further, we’d love to hear from you.