Learn more about ESEF, iXBRL tagging, taxonomy and instance documents
What is ESEF Reporting
ESEF stands for European Single Electronic Format. It is a format of reporting annual financial statements that will be enforced by the European Stocks and Markets Agency (ESMA).
According to European Transparency Directive (ETD) this format will be mandatory to use for all Annual Financial Reports beginning 1st of January 2020.
The RTS on ESEF will apply to all issuers subject to the requirements contained in the Transparency Directive to make public AFRs.
The ESEF requires that:
What is XBRL?
XBRL, abbreviation for eXtensible Business Reporting Language, is an XML-based language for tagging financial data that enables business to efficiently and accurately process and share their data. This is a language that allows the presentation of financial information in a computer readable format. This is achieved by tagging each piece of financial information with a label that identifies it in terms of standard accounting or tax concepts. XBRL is being increasingly adopted by both businesses and regulators world-wide.
XBRL is an information exchange standard and not an accounting standard. XBRL is purely concerned with the introduction of computer-readable XBRL tags into business reports to enable automated handling of financial data. It should not otherwise change the nature and content of company business reports. That continues to be determined by individual companies’ adoption of accounting principles and applicable statutory regulations.
What is iXBRL? How is it different from XBRL?
Standard XBRL is presented as a series of tags and numbers. iXBRL, or inline XBRL, is a more recent version of the language which allows financial information to be presented in a format that is both human readable and machine readable. This is achieved by presenting the data (e.g. Financial Statements) in a normal document format but with XBRL “tags” embedded in the soft copy document. iXBRL thus handles both the presentation of accounts and the delivery of XBRL data in a single file.
What are the components of XBRL
The different components constituting the XBRL are listed as follows :
What is iXBRL taxonomy
iXBRL tags are interpreted by reference to “taxonomies”.
The word Taxonomy is derived from two Greek verbs, tassein meaning “to classify” and noos meaning “law, science” so the word taxonomy means “Science/law of classification”. XBRK Taxonomy is classification of all concepts into groups, such all Balance Sheet related concepts are grouped together, all “Assets” concepts are grouped together and so are concepts elated to “Liabilities”.
An XBRL taxonomy can be considered similar to a dictionary that is referenced for business terms and applying their corresponding tags. The taxonomy is a grouping of financial concepts known as “elements”. Each concept is defined linking each tag with the concept it identifies. Additionally, the taxonomy also defines the relationships between the concepts within the group. Therefore, if we are working with a balance sheet item such as Cash, the taxonomy would include the definition of Cash and would also demonstrate how Cash may relate to other balance sheet items (within the taxonomy) such as rolling up to Current Assets and eventually Total Assets. All three of these items (Cash, Current Assets, and Total Assets) are financial concepts that are defined and presented in the taxonomy as elements.
Taxonomies are open-source documents published on the internet. There are taxonomies for most accounting standards worldwide including the various GAAP and IFRS standards. Published taxonomies may be supplemented with “Extensions” to meet specific needs.
Some tax administrations have published their own taxonomies to support the return of tax assessment data.
What is iXBRL tagging
iXBRL tagging is the process of applying the entity’s unique financial data to an element within the taxonomy. The tagging process is performed during the creation of an instance document.
What is iXBRL instance document
An iXBRL instance document is the file that includes the company specific business reporting information in a structured manner that computers can intelligently recognize and exchange. It is expected that instance documents will be created for individual financial reports (e.g., annual reports, earnings releases, submissions to creditors, etc.). The instance document is an XML file where everything comes together; here the entity specific data links (tags) to the elements in the taxonomies to form the XBRL document that can be validated and transmitted automatically for utilization by numerous consumers.
Creating iXBRL reports
The conversion of reports in ‘native’ format, such as Word or Excel, into iXBRL involves matching the data in the accounts and tax computations with XBRL tags from the appropriate taxonomies using a software tool that presents the marked-up (or 'tagged') report(s) in an (X)HTML document.