ESEF (European Single Electronic Format)

[Marek Muc]

Annual reports for 2020 of issuers in the EU will prepared under ESEF. Or maybe not, as the EU contemplates postponing the deadline for 1 year (subject to individual decisions of member states).

So, are your companies ready to say bye to good old pdfs? Did you change your disclosure software on this occasion? Any other thoughts? Let's talk ESEF in this topic

[JRSB]

I'm not in the EU so cannot comment!

[Marek Muc]

[exIFRS]

[JRSB]

Does Brexit affect this?
The FCA is implementing the requirement in the UK and has added DTR 4.1.14 to the Handbook. The digitisation of financial statements is a global trend and we are not surprised at the level of interest ESEF is generating in the UK.

Will the auditors be checking the new tagging?
In time, we expect that there will be a mandatory role for the auditor, because the FRC has indicated that assurance required by law or regulation would be a permissible service to provide to audit clients. However, the requirements are yet to be developed and communicated.


Another nice fee for the auditor.

[Marek Muc]

Honestly I don't how Brexit affects this in UK. I don't even know how Brexit affects IFRS mandate in UK, do you?

EC clarified recently that a statutory audit opinion should cover XBRL tagging as well:

Union law requires statutory auditors to provide an audit opinion on whether the financial statements included in the annual financial reports comply with the relevant statutory requirements laid down in the ESEF Regulation, i.e. with the provisions of the ESEF Regulation that apply to financial statements.

https://ec.europa.eu/finance/docs/law/2 ... sef_en.pdf

This won't be a separate engagement/audit report, so I guess the potential for an additional fee is limited

[JRSB]

EU IFRS and UK IFRS are exactly the same at 1 Jan 2020. But then we adopt at our own pace and requirement. There could also be divergence of who must apply IFRS. One assumes it would be foolish to change who applies it on a mandatory basis (unless we increase the base).

[Marek Muc]

hm, and who uses UK IFRS? I thought you still had UK GAAP for entities that don't use EU IFRS

[JRSB]

No one yet. Everyone who applies EU IFRS now will use UK IFRS for periods starting 1 Jan 20.
Everyone else (almost), yes, UK GAAP which is based on IFRS for SMEs but amended to cater for people used to the old UK GAAP (eg goodwill is amortised). Called FRS 102.

[Marek Muc]

ok clear, thanks

[Marek Muc]

https://ec.europa.eu/commission/pressco ... ex_20_2389

The European Parliament and the Council also agreed today to an amendment of the Transparency Directive allowing Member States to delay by one year the application of the European Single Electronic Format (ESEF) requirements for listed companies' annual financial reports, provided that they notify the Commission of their intention to do so, and of their sufficiently justified reasons. Listed companies who wish to publish their ESEF annual financial reports in 2021 will still be able to proceed. The amendments will apply 20 days after publication in the Official Journal of the European Union.

[Jonny]

Good to know. Waiting for the countries decision.

[JRSB]

Here is the official list of UK-adopted IFRS for those interested...

https://www.endorsement-board.uk/uk-ado ... y-standard

[Marek Muc]

thanks, similar approach to EU - illustrative examples and bases for conclusions not available

[Marek Muc]

the deferral of ESEF

Article 2

Amendment to Directive 2004/109/EC

In Article 4(7), the first subparagraph is replaced by the following:

‘7. For financial years beginning on or after 1 January 2020, all annual financial reports shall be prepared in a single electronic reporting format provided that a cost-benefit analysis has been undertaken by the European Supervisory Authority (European Securities and Markets Authority) (ESMA) established by Regulation (EU) No 1095/2010 of the European Parliament and of the Council (*2). However, a Member State may allow issuers to apply that reporting requirement for financial years beginning on or after 1 January 2021, provided that that Member State notifies the Commission of its intention to allow such a delay by 19 March 2021, and that its intention is duly justified.

https://eur-lex.europa.eu/legal-content ... 23&from=en