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The ESEF reporting and the XBRL reporting

8 October 2022 | EN

Admission to trade in securities on the EU market requires issuers to prepare annual reports. The ESEF reporting i.e. a EuropeanSingle Reporting System. The purpose of setting a precise framework for stock exchange reporting by EU institutions is a transparent and comparable financial data system, as well as a combination of readability for humans and machines equipped with financial algorithms in one standard. In ESEF reporting, complete annual reports formatted as XHTML play a key role, as well as marking financial statements in accordance with the adopted ESEF taxonomy. The concept of Extensible Business Reporting Language (XBRL) appears here, defining the language of management and financial reporting in accordance with the adopted ESEF taxonomy. XBRL reporting therefore consists in adding tags to the final report, guaranteeing full understanding of the terminology used.

ESEF stock market reporting – key advantages

ESEF reporting brings a number of unquestionable advantages for investors. Listed companies have gained a tool for quick comparative analysis of the results of other entities, as well as a reduction in the number of errors. Proceeding according to an effective scheme gives stock exchange reporting professionalism and comparability. The advantages of the universal structure of reports are also revealed to the investors themselves. ESEF reporting by listed companies significantly accelerates the process of fundamental analysis, which for many stock market players is still the only effective method of making investment decisions. Data transparency also serves the state control authorities, which gain additional tools to verify the compliance of the report with applicable regulations. Stock market reporting based on ESEF standards has been in force since January 1, 2021.

What is the XBRL standard in ESEF reporting?

Management reporting under ESEF occurs as XBRL reporting. This abbreviation refers to a specific language for the effective exchange of financial information. The main advantages of the XBRL reporting process should be seen in the unambiguous taxonomy that integrates each element of the final report with the published glossary of terms. Each term is also assigned additional attributes, such as currency or validity period.

Management reporting created in the XBRL system allows for easy conversion to other formats, facilitating the work of various analytical systems. The content of the information always remains the same, easily recognizable by databases and stock analysis software. All XBRL tokens are unique, regardless of the issuer’s country of origin. The new EU regulations treat the ESEF standard as a condition for correct reporting in the annual settlement, resulting directly from the statutory activity. When switching to ESEF reporting, it is worth using Insight Software’s, the Certent CDM tool, proven by thousands of companies, designed to automate the preparation of annual financial statements. Incube CPM is a long-term partner successfully implementing the Certent Disclosure Managem solution (Certent CDM). The extensive scope of taxonomies and regulations requires prior planning of the report creation, and also justifies the use of the help of specialists.