iXBRL Annual Reporting in Compliance With The European Single Electronic Format (ESEF)

From the 1st January 2020, the EU directive for a European Single Electronic Format (ESEF) came into force. All publicly listed companies, from this date, must prepare their Annual Financial Reports (ARFs) for financial years that start on or after 1st January 2020 in an inline XBRL format.

Creating a iXBRL report is a little more difficult than the previous PDF method but it does mean that all reports are submitted in a machine readable (and human readable) format. This provides many benefits to companies, investors and regulators.

  • Companies only need to review and approve one version of reports, saving time, money and increasing reliability of data and decision making.
  • Investors benefit from a common and standard format which allows for more trusted and transparent review of data as well as increased ability to collaborate cross-borders.
  • Regulators benefit from an update to the previous XBRL format which didn’t always match the data in the source document. iXBRL data is linked and tied to source document which can reduce the number of errors and be used to more easily spot signs of malpractice or fraud.

iXBRL has already been implemented by regulators around the world including HMRC in the UK (April 2011), Japan’s Financial Services Agency (JFSA) in 2013, the Danish Business Authority in 2015, the CIPC in South Africa in July 2018 and the Australian Securities and Investments Commission (ASIC) in 2015.

The iXBRL report you file is the official audited report which will be used by the regulator and stakeholders. You want to make sure that the document not only looks good but is tagged correctly using the guidelines set out by the ESMA.

What does your organisation need to do to upgrade to iXBRL reporting? The UK Government website states:

Most companies will not have to take special steps to convert accounts or computations into iXBRL themselves. This will be done automatically by commercially available final accounts production (FAP) or tax preparation software. However, FAP and conversation software users may have to do some manual tagging initially to expand on the automatic tagging provided by the software.

Many larger organisations produce their accounts and tax computations using a word processor or spreadsheet programme; they don’t use FAP software. They can continue to do this, if they choose, but they’ll need to insert XBRL tags and convert the documents/spreadsheets into an iXBRL file using conversion software and file as part of their Company Tax Return.”

HMRC provides a free service for companies who want to send tax returns in the correct iXBRL format. If you do not meet the requirements for using this service, you will have to use commercial software to file your tax returns. Make sure when choosing a software, that it indeed files in the iXBRL format. The government website has a list of safe suppliers with iXBRL integration here.

An example of an iXBRL annual financial report created by the Global Legal Entity Identifier Foundation (GLEIF) can be found at this link.

Legal Entity Identifiers in iXBRL Reports

The regulatory technical specifications of the European Single Electronic Format requires that:

issuers identify themselves using the Legal Entity Identifier (LEI). Therefore, the XBRL International LEI taxonomy is imported in the ESEF taxonomy to provide the means to report and verify the validity of the LEI used by the issuer to identify itself in the Inline XBRL document.”

In short this means that avoiding validation errors with your iXBRL annual report, requires a Legal Entity Identifier to be displayed correctly.

  1. Name of reporting entity – the name of the reporting entity needs to be tagged or submission will be rejected.
  2. Legal Entity Identifiers can only be used once – organisations are required to report their LEI only once. Multiple LEIs will be rejected.
  3. Legal Entity Identifiers must be standardised – make sure your LEI is correct according to the ISO 17442 standard. LEIs not in standard format will be rejected.
  4. Legal Entity Identifiers must be valid – lapsed or incorrect LEI numbers will be rejected.

You can see more examples of invalid errors when uploading an iXBRL report here. You can also read more about the inclusion of LEI taxonomies into the iXBRL format here. The GLEIF also published a short video giving an overview of the LEIs use in ESEF compliant reporting which is well worth the watch.

In short, whether you choose to create your iXBRL reports in-house or you’re using an accounting software/HMRC tools that take care of the formatting for you, the one thing organisations cannot avoid is the need to purchase an LEI Number.

LEIs are very easy to purchase with registration taking minutes. After filling in a form and signing a document, a GLEIF approved registration agent like us will validate the information and issue you with your LEI number in minutes. Your LEI number will then appear in the GLEIF’s open LEI database in a matter of days.

LEIs need to be renewed yearly and this can become a burden for organisations, which is why we decided to offer multi-year options where we take care of renewal for you.

Get your LEI Number for as little as £32 a year here.

How to Reduce Legal Entity Identifier Risk | ManagedLEI 2020-07-28 09:56:03
[…] validation requirements. For any companies that are reporting under regulations such as MiFID II or ESEF iXBRL format where an LEI is required, ESMA guidelines state that the LEI […]

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