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Consolidated financial statements in XBRL format

Reporting in accordance with ESEF

From 1 January 2020 companies which are listed on the EU capital markets and prepare their consolidated financial statements in compliance with International Financial Reporting Standards (IFRS), as adopted by the EU, will be obligated to report in the XBRL format.

In 2017 European Securities and Markets Authority (ESMA) announced European Single Electronic Format (ESEF) - the guiding principles for preparing consolidated financial statements of listed companies from 2020 on. This new formal requirement related to the preparation and disclosure of financial information is intended to allow easier analysis and comparability of reported data. However, it requires adapting reporting processes, staff training and implementation of all necessary technological solutions for the people responsible for preparing the financial statements. 

 

Financial data will have to be presented according to rigid XBRL format schemes

eXtensible Business Reporting Language (XBRL) is an EXtensible HyperText Markup Language (XHTML) based format but with defined standard items from financial statements (taxonomies), with standardized time and currency designation. XBRL enables us to save financial statements in a format that allows reading the document in any web browser without using any additional software.

In the future, reports in XBRL format will be audited

The role of the auditor in relation to new data has been taken into account by the European Commission, which considers ESEF principles as statutory requirements within the meaning of the EU audit directive. This suggests that, over time, the auditor will have to deal with data reported in accordance with ESEF. However, the Commission has also signaled that more needs to be done before the position is fully clarified. In particular, the Committee of European Audit Supervisors (CEAOB) has been asked to examine how ESEF audits can be carried out in practice and, if appropriate, provide binding guidelines.

Be prepared for new ESEF requirements implemented

The implemented requirements do not force the creation of new information, but only relate to the recording format change. The point is that existing information will be made available in both human-readable and machine-readable formats. Therefore, it seems reasonable that the adjustment activities in companies should be perceived primarily as actions to ensure compliance with regulations.

The preparation of annual reports is a costly and time-consuming process. The new requirements are a good starting point for analyzing the existing policies, identifying potential savings and optimizing processes related to the preparation of financial statements.

Before making any operational changes, implementations or optimizations of the currently generated annual financial statements, three basic questions need to be considered:

  • Is the taxonomy published by ESMA transparent and understandable?
  • How many deviations from the published taxonomy will it affect? Can existing tags in taxonomy be assigned to items from our consolidated financial statements?
  • Does the reporting team have adequate skills as well as enough time to correctly assign tags to individual parts of the financial statements?

How can we help?

In PwC, we support you at every stage of XBRL implementation:


Training

Through training, XBRL experts will share their knowledge and experience on the significance and impact of the ESEF. The training provides a solid understanding of the new requirements and provides possible answers to the key challenges that the new XBRL format implements for the reporting in compliance with ESEF. 


Design and implementation of processes

We will review the current process of preparation of consolidated financial statements using walk-through procedures while focusing on key areas based on the new ESEF requirements and identify weaknesses in processes and areas that can be standardized and optimized. We will design and support the implementation of corrective actions and appropriate internal controls to ensure that deadlines for the preparation of the annual report in a new electronic format are met. 

Mapping and tagging consolidated financial statements

As part of the mapping process, we will reconcile the relevant parts of the consolidated financial statements to the new ESEF taxonomy in accordance with the requirements that will apply from January 1st, 2020. The final product is a "blueprint" report describing the mapped items from the consolidated financial statements to the markers (tags) required by the new ESEF rules.
As part of the tagging service, we will prepare a tagging project in accordance with the ESEF requirements for specific companies (we cover companies from different sectors with specific structures of financial statements).

We also offer verification of a tagging project prepared by our clients. As part of this verification, we will provide an overview of the collected data to identify any gaps. We can also prepare a data quality assessment in terms of consistency, completeness and accuracy.


Implementation of the tool - XBRL Reporter

XBRL Reporter is an application prepared by our experts that allows to create a report in XBRL format in accordance with the requirements of ESEF.

As part of the implementation process, we offer training and workshops for users and administrators of the tool. We can also perform the tagging service for the report provided to us by the customer using the XBRL Reporter or a tool that the company already owns.

Additionally, we can support the process of choosing a tool for the purpose of reporting in accordance with XBRL by reviewing and comparing the existing tools on the market. The comparison in the form of a benchmark report will indicate the key distinguishing features of each tool and assess its suitability for the company specific requirements.

XBRL Reporter allows to create a report in XBRL format in accordance with the ESEF

XBRL Reporter is a plug-in for MS Word and enables tagging individual items of the report with tags defined in IFRS taxonomy.

Full compliance with ESMA taxonomy

Intuitive and quick tagging process

Data quality and easy control

Financial statements in XBRL format in any language

Main functionalities:

  • Tagging report items with IFRS taxonomy tags, supported by step by step instructions and advanced tag search;
  • Allows creating extensions in taxonomy;
  • Tagging validation to ESMA requirements in a transparent report;
  • Includes description of comments and warnings;
  • 'Blueprint' report which summarizes the marked items of the report and tags assigned to them, which simplifies the verification process significantly;
  • Generation and validation of the report in XBRL format;
  • Taxonomy support in many languages.

Contact us:

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Yulia Berus

Senior Associate, Risk Assurance Services, PwC Slovenia

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