ESEF Update – Jan 2021

ESEF is a new annual reporting filing requirement, which provides your report in a digital package that is tagged with additional data (iXBRL). Following some confusion and debate over the precise requirements, we are pleased that the UK government has recently announced some crucial clarifications, and that it has taken a pragmatic approach to the implementation of ESEF.

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Friend

ESEF is a new annual reporting filing requirement, which provides your report in a digital package that is tagged with additional data (iXBRL). Following some confusion and debate over the precise requirements, we are pleased that the UK government has recently announced some crucial clarifications, and that it has taken a pragmatic approach to the implementation of ESEF.

 

Over recent months UK companies have been preparing for ESEF against a backdrop of uncertainty about Brexit and Covid, but there has also been uncertainty about some key aspects of the ESEF implementation – especially around timings, audit and board sign off of the iXBRL tagging.

We are pleased that the UK government has recently clarified these three key aspects of the requirements, taking a pragmatic approach, and giving the implementation and adoption of iXBRL tagging a greater chance of success for all stakeholders.

 

 

1. Audit of the tagging is NOT mandatory (in the UK)

It was confirmed by the government on 11 December 2020 that audit of the iXBRL tagging in the ESEF report will NOT be required in the UK. Companies may still choose to ask their auditor, or any other auditor, to perform a voluntary assurance on the tagging if they wish. We would expect most to focus on the tagging challenge in the early years, and consider voluntary audit or assurance of the tagging in the future.

 

 

2. Board sign off of the tagging is NOT mandatory

It has been confirmed by the government that Board sign off is NOT required on the ESEF report tagging either. This announcement also clarifies that the iXBRL tagging can be applied after audit and board sign off of the report have been completed. This is helpful because it offers companies greater flexibility in the solutions available for the tagging.

 

 

3. ESEF delayed by one year (in the UK)

As anticipated, the one-year delay to the mandatory filing of the ESEF report has been confirmed in the UK. All issuers within the scope of ESEF will now be required to file and publish their ESEF report for financial years beginning on or after 1 January 2021. 

Despite the delay, the regulators are recommending that companies still make a voluntary filing for their 2020 report. This will help companies and service providers to iron out any issues and raise any questions, and it would enable the regulators to clarify requirements and give further guidance.

Our view

Friend Studio supports this delay because it will allow companies and service providers like us time to prepare fully, and enable UK regulators to answer any further filing questions. 

We are encouraging all of our clients to continue their ESEF tests and pilots as early as possible – the extra time allows more thorough preparations, including considering a voluntary filing to test the output and the filing system.

Find out more about our solutions here in our ESEF made easy article.

If you haven’t already started your ESEF preparations and would like to learn more, please get in touch.

 

Possible EU-wide delays to ESEF

In line with the UK position, the EU has also given Europe’s other national regulators the option to delay the ESEF requirement by a year in their region. Some countries have yet to confirm whether they will delay or proceed with implementation for 2020’s reports.

Related article: ESEF made easy