ESEF Tools
The ESEF acronym has been top of mind for finance professionals across the EU and UK since mid 2019, when an upcoming reporting mandate from the European Securities and Markets Authority (ESMA) was announced.
ESEF, which stands for European Single Electronic Format, is a digital financial reporting standard based on XBRL. Since early 2020, companies on EU regulated markets have been mandated to prepare their annual reports in accordance with ESEF rules.
What exactly is ESEF compliance, and what does it take to meet reporting requirements? Let’s take a look at the basics and some tools that make it easy.
What is ESEF?
ESEF is an electronic reporting standard created by ESMA, the EU’s securities markets regulator. The standard is part of the organization’s Transparency Directive, which seeks to improve transparency of financial information for investors by standardizing reporting and making reported information available to the public in easily accessible ways. To meet those needs, ESEF is based on XBRL technologies.
XBRL, the eXtensible Business Reporting Language, is a well-established standard for financial reporting in use worldwide. XBRL aims to reduce costs through the elimination of time consuming and error prone human interaction. Tagging data using XBRL increases the speed of data integration and exchange, while at the same time eliminating data redundancy and quality issues.
ESEF specifies that:
- IFRS (International Financial Reporting Standards) statements in annual reports must be tagged in iXBRL. iXBRL embeds XBRL tags in an XHTML document to produce a report that is formatted nicely for human consumption and is simultaneously machine readable.
- Reports conform to an ESEF XBRL taxonomy that is an extension of the IFRS taxonomy.
Advantages of ESEF Reporting
The objectives behind the ESEF mandate are to make reporting easier for issuers and to facilitate easy analysis of annual financial reports. Standardizing on XBRL offers several advantages in support of these goals, including improved data quality through data validation, improved compatibility and consistency for software processing, and simplified comparison of reported data within an organization and among multiple companies.
Thanks to ESEF, consolidated financial statements of EU and UK companies are now freely available to regulators and investors – and they are readable by humans and computer software programs.
Challenges in Creating ESEF Reports
With the advantages of ESEF reporting comes a bit of a learning curve for reporting companies. Proper tagging of reported data using XBRL requires deep technical knowledge that may be a hurdle for business users.
To conform to filing requirements laid out in the ESEF Reporting Manual, filing companies must first get data from their backend accounting systems into a valid iXBRL document based on an ESEF extension taxonomy. The extension taxonomy defines the specific tags that are used for individual items of data as well as their attributes and their interrelationships, along with any disclosures that are specific to the reporting entity. The standards-based tags help software to understand the meaning of each reported figure.
Once tagged, filings must pass both technical validation (schema, calculation linkbases, consistency checks) and business validation (taxonomy and regulatory rules). Even small errors can cause a filing to be rejected by the regulator.
Given these requirements, creating a valid ESEF report manually would be an untenable feat without the aid of software tools to make it easier.
Financial professionals need ESEF tools that allow them to meet reporting mandates without being burdened by the complexity of the XBRL syntax.
ESEF Tools
Altova offers a complete suite of XBRL tools, including the free XBRL Tagging solution for building valid ESEF reports without the need for manual XBRL tagging.
This unique, cloud-based solution lets you start with a human-readable version of your company's annual financial statement in whatever format it is usually generated in: PDF, HTML, etc., and add tags directly to that familiar view using a visual, point and click interface.
Simply upload your report and your company's extension taxonomy, and start tagging with your mouse. Based on your selection, a searchable pop-up menu driven by the underlying taxonomy gives you valid options to tag an individual fact or footnote, select a region to give it common properties, and auto-detect tables.
As you work, the Details pane displays the Properties of each tagged fact, the regions created in the document, footnotes created in the document, and the linkroles defined by the taxonomy. In that pane, the Linkroles tab allows you to see which tags have been assigned and which remain, and you can quickly navigate to any fact by clicking it here.
When you are finished tagging your ESEF data, click Export, and XBRL Tagging will generate a fully compliant iXBRL report in line with the chosen taxonomy.
Here's how it works:
This visual approach solves several of the challenges associated with generating ESEF reports:
| ESEF Challenge | How Altova XBRL Tagging Helps |
|---|---|
| XBRL syntax complexity | Visual, no-code tagging reduces errors and learning curve |
| Block tagging requirements | Point-and-click, region-based tagging and linkrole management |
| Tedius tagging of large tables | Auto-detection and property inheritance enables fast, accurate tagging of large tabular data |
| Complicated footnote attribution | Provides smart footnote tagging and association with corresponding fact |
| Regulatory technical compliance | Taxonomy-driven tagging choices, built-in validation, and automatic generation of compliant iXBRL filing documents |
| Complex IT setup | Cloud-based solution. No download, account, or set up required |
| Expensive software or consultant fees | Free and easy to use for financials professionals; no consultants required |
What Sets Altova XBRL Tagging Apart?
While there are other visual XBRL tagging applications for ESEF on the market, Altova XBRL Tagging is uniquely designed to remove the usual barriers to adoption.
Beyond its ease-of-use, this solution is backed by Altova’s long-standing reputation as a trusted leader in the XBRL space, with multiple Certified XBRL Software designations from XBRL International. XBRL Tagging brings that same reliability to a completely free, cloud-based tool. With no downloads, IT overhead, or complex setup required, you can get started immediately right in your web browser. This combination of industry expertise, zero cost, and zero hassle sets Altova XBRL Tagging apart, making the technology accessible to anyone who needs it, when they need it.
Start Tagging ESEF XBRL Now
Get started now at xbrl-tagging.com. It’s free and you can start tagging immediately – no account or password needed.
If you wish to save your progress, you may create a free account at any time. Your work will be preserved, and you can log in at any time to continue working. If you try the XBRL Tagging solution and do not wish to create an account, simply exit the app and your data will not be saved.