Fresh 2022 news on ESEF reporting
Fresh 2022 news on ESEF reporting
Starting with 2021, all listed entities reporting under IFRS must submit their annual financial report in xHTML (Extensible Hypertext Markup Language) format. The entities shall mark up these financial statements using the xBRL (eXtensible Business Reporting Language) markup language. The XBRL ‘tags’ shall be embedded in the XHTML document using the Inline XBRL technology, which allows the benefits of XBRL tagged data to be combined with the human readable presentation of annual financial reports.
For the financial year 2022, the latest taxonomy to be used is Taxonomy 2021 (vs. Taxonomy 2020 for the prior year). The Taxonomy 2021 is an extension of the IFRS taxonomy and every element shall be marked up using the taxonomy element that has the closest accounting meaning or otherwise, users can create an extension and anchor such extension to the core taxonomy that best represents the economic substance of the disclosure.
Key changes for the 2022-year reporting
- As of 2022, reporting published in iXBRL format must now include tagging of notes in addition to the primary financial statements. Notes are tagged in blocks, and this represents a less detailed tagging and should be applied when the information is considered material. There are three different types of block tags: general information, description of accounting policies and disclosure of accounting policies;
- In the new Taxonomy 2021, one element was deleted from the prior taxonomy, namely the „Basic and diluted earnings (loss) per share” and two items have been added: „Retained earnings profit loss for reporting period” and „Retained earnings excluding profit loss for reporting period”. These two elements are used to better represent the nature of the net income of an entity left;
- The reporting manual has also been updated and now includes features such as the possibility to create extensions without balance (« Net cash flows from (used in) operations » is mentioned in reporting manual 2022 as an example of acceptable items) and the respect of the LC3 convention which still remains not necessary.
Focus on block-tagging of notes in 2022
- ESMA expects that the notes to the IFRS consolidated financial statement (including headers/titles) should be tagged with elements of the annex II of the RTS (ie. mandatory block tags). In case of a disclosure corresponding to more than one element of different granularity (with narrower and wider elements), preparers should use each of them and multi tag the information to the extent that corresponds with the underlying accounting meaning of the information. It is commonly called nested tags, or “hierarchy”. The hierarchy has just been published recently by XBRL Europe and some block tags can have even 4 or 5 anchors.
The Taxonomy 2021 includes 252 block tags, divided in three different types: (1) General information (same type of information than last year), (2) Description of accounting policy (by accounting subject), ex. Description of accounting policy for finance costs and (3) Disclosure of accounting policy, ex. Disclosure of finance cost; All these mandatory tags will not be used for your report. A ‘classic’ issuer will use between 60 and 120 mandatory block tags.
Financial auditors will issue an opinion on the financial statements prepared in ESEF, via a specific paragraph included in the audit report. The 2022 audit report should also include reference to the block-tagging.
To have a successful implementation of the ESEF reporting for block-tagging and provide more reliance on the annual report for the investors of your company through transparency of the reporting, choosing a trustworthy partner that has a good understanding of the ESEF requirements and IFRS framework, is definitely a key matter.
For more details concerning the advisory and assistance services offered by Mazars in respect of ESEF reporting, you can contact us below.