5 Things You Can Do Now to Prepare for the ESMA Mandate
The European Single Electronic Format (ESEF), a new regulation specified by the European Securities and Markets Authority (ESMA), goes into effect for accounting periods starting 1 Jan 2020, which means the first ESEF reports will be submitted in 2021.
Based on those dates, you might be thinking that the ESMA mandate is a far-away concern and that the 2020 annual report gives you plenty of time to prepare. However, in reality, that could not be further from the truth.
In this blog, we look at five things you should be doing now to ensure your organisation is ready for the new ESEF requirement.
1. Get everyone on board
Now is the time to look closely at how the ESMA mandate could change your reporting processes, and make sure that everyone in your team has the right skills required for this new approach. For example, are you fully confident in your ability to understand and review tagging?
Additionally, compliance teams can use this time to get everyone on board to understand the new format and how it affects everyone in the group.
Financial reporting has remained the same for years—do not underestimate the possible disruption that this new legislation and its new timeline may cause.
2. Think about doing a test run
The final version of the 2020 ESEF taxonomy is due to be released before the end of the year, which will then be updated annually in line with the IFRS Taxonomy.
It is recommended to consider a dry run to test your workflow after the ESEF taxonomy is updated. By doing a dry run, most of the tags will roll over to when the ESEF becomes mandatory.
Remember: it is digital first. The PDF will need to be generated from the same source to avoid misrepresentation. Think about using a solution, such as the Workiva connected reporting platform, that enables you to do this simultaneously.
In this quarter, research your responsibilities. By understanding what is expected, you will make better decisions on how to proceed.
3. Discuss design requirements and possibilities
Talk openly with your design agency. Investors are accustomed to receiving a highly designed PDF version of the report. Therefore, be sure to discuss your design requirements and design possibilities now to avoid disappointment.
If you decide on using a tagging service bolted on to your traditional workflow, the reporting timeline will be dramatically reduced. Make sure everyone in the team knows this.
With Workiva, for example, you can produce a designed XHTML document that looks like the PDF of the report that investors expect. Workiva also offers the flexibility to either give your design agency secure access to the platform or the ability to download content via an ICML file for InDesign®, if necessary.
Regardless of which route you take, Workiva can work with your design team to ensure your final report meets your brand guidelines.
4. Determine your preference: third-party tagging service or software solution
Use this time to decide whether you want to use a third-party tagging service or a software solution.
By outsourcing your iXBRL to a tagging provider, you do not outsource your responsibility for the decision of the tags. The board and committee do need to understand the taxonomy and agree with the decision of the tag and/or the use of an extension. Since it is necessary to review and sign off on the tags, it makes sense for the board to get involved in the decision-making process from the start.
Software solutions are designed to make tagging easy. At Workiva, you have the backup of professional assistance whenever you need it.
5. Register for the Workiva ESEF Roadshow
The Workiva ESEF Roadshow is a series of events designed to keep you informed on the latest developments around the ESMA mandate and to help you prepare for the new requirement. See demos, hear from experts and get help with the questions your organisation is struggling with.
Spots are filling up fast. If you have not registered yet, secure your place now.
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