A major change in financial reporting rules is on its way for companies listed on regulated markets in the European Economic Area (EEA). The European Securities and Markets Authority (ESMA) is introducing a European Single Electronic Format (ESEF) that will be mandatory for all annual financial reports (AFRs) filed for financial years starting on or after 1st January 2020.
Key elements of ESEF include the requirement to file reports in XHTML format and to tag financial data with Inline extensible Business Reporting Language (iXBRL), which allows for machine-readability and transparency across companies and countries
Though complying with the ESMA mandate may seem like an additional burden on an already overburdened Finance function, there is a real opportunity to add value through process change and greater efficiency which could transform the annual reporting cycle from a time-hungry lengthy cycle into a high value, insight-driven process.
As with many company processes, unless there are compelling external pressures for change, the old adage of “if it is not broken don’t fix it” applies. Whilst during reporting periods, the pressure to get the results out is intense and there are multiple stages of transposing and checking figures these issues are soon forgotten when the reports have been filed and reporting period finished.
But, in 2020, with the introduction of ESMA, there is the compelling reason for change and the opportunity to review processes which have not been updated in many years. Its time to ditch the manual processes and hours of working across multiple spreadsheets. Technology is now available to take the strain, dynamically integrate your figures and let you concentrate on narrating the high-value insight behind your reported figures. While perhaps obvious, the high-value asset which is often overlooked is the data. The challenge most Finance departments have is the sheer volume of data and the old school processes used to control and access the data for either external or internal reporting, and this is a risky area when data is constantly changing at the source.
But, it’s the insight, the story, behind the numbers which makes the difference and will provide a whole new dimension to reporting if the Finance team is released from the mundane number checking and spreadsheet manipulation often associated with reporting.
Through using new software to enable ESMA compliance, the opportunity for Finance efficiency, process change and greatly improved narrative reporting is one that many CFO's will embrace and enable the drive for greater strategic insight and analysis, without the need for additional staff.
For more insight into the ESMA solutions offered by Certent, take a look at our ESMA insight page