| Blog 3 of 3 | 5 minutes read |
Everything you need to know about ESEF
From now on, all companies with securities in the European Union and the UK will have to publish their annual financial report in digital form in accordance with the new guidelines of the European Securities and Markets Authority (ESMA). ESMA has developed a ‘European Single Electronic Format’ (ESEF) for this purpose. What does this mean for your organization?
In our previous blog we discussed the impact of ESEF for organizations. We explained the need for a dedicated project when implementing ESEF. One of the most important tasks for the project team is the selection of adequate software tooling. In this blog we therefore address the following question:
What to look for in an appropriate software solution for ESEF?
In answer to this question we have worked out two scenarios. The first scenario deals with meeting the minimum requirements of ESEF only. You might however face more challenges when disclosing financial reports or other corporate disclosures like sustainability reporting. The ESEF mandate then can serve as a trigger to further improve these processes. In the second scenario we therefore take a broader perspective by discussing the benefits of implementing a comprehensive disclosure management solution.
Scenario 1: Meeting ESEF minimum requirements: use a point solution
The main requirements for ESEF are:
- Publish the annual financial report in XHTML format;
- Apply inline XBRL (iXBRL) for all consolidated IFRS Financial Statements.
In order to fulfill these requirements, appropriate software is needed. Since iXBRL and XHML are strongly intertwined with each other, software vendors provide solutions that are capable for performing both tasks in one solution.
We call these solutions a point solution because the software tool is focused only on delivering these iXBRL and XHTML specific tasks. The benefit of a point solution is that it is often a low effort to implement it. A disadvantage is that it is an additional tool in your software landscape. The solution then might become loosely coupled (not fully integrated) to your existing group reporting tools and workflows. This lowers the efficiency and the quality of the reporting process as a whole.
It is therefore beneficial to have a broader view. There are modern solutions on the market which cover the full picture of disclosure reporting requirements, including the most recent legal filing requirements like ESEF.
Scenario 2: Harmonizing all disclosure processes at once: use a Disclosure Management solution
Apart from the ESEF requirements, you might already face other challenges when creating external financial reports. For instance, you can think about:
- Attaining data quality and consistency among disclosed documents;
- Formatting and maintaining brand standards among disclosed documents;
- Creating the disclosed documents on time;
- High costs associated with the disclosure of reports;
- Multiple international filling requirements that differ based on country regulations.
In that case you should consider to enhance your disclosure management processes and software solutions. The new ESEF requirements can function as an enabler to improve these disclosure processes coherently.
Current modern disclosure management software solutions streamline the reporting cycle by automating the collaborative financial process to a large extent. These tools directly plug in to your financial/consolidation system and are fully integrated with the Microsoft Office Suite. Besides offering capabilities for extensive workflow management and version control, the main advantage is that these tools automatically generate and update disclosure reports in multiple output formats (pdf, HTML, XHTML, Powerpoint, and more) with a single click. And it ensures even that the look-and-feel for all the different output formats is exactly the same!
It is really worth to reconsider your current disclosure management software landscape if it is not yet supporting for all filing requirements, like ESEF. Implementing a modern disclosure management solution will make the external reporting process far more efficient, less costly and prevents a lot of frustration often seen when reporting figures are not harmonized with each other.
How does CPMview helps organizations?
CPMview helps organizations to meet the ESEF mandate. We therefore help organizations to select and implement the appropriate software tool(s) for ESEF. We have knowledge from ESEF point solutions in the market and we have a broad experience with implementing Disclosure Management solutions.
Thank you for reading this blog. If you want to know more about this topic or in case you have questions about our services related to ESEF and software implementations for ESEF, feel free to contact us.