ESEF is the European Single Electronic Format that will come into effect for the annual filing of those financial years starting on or after 1st January 2020; and is part of the amended Transparency Directive produced by EU’s Regulatory Technical Standards. Companies which are publicly listed must adopt the new regulatory reporting framework and its underlying technical standard, in order to produce and submit the annual financial reports to the Officially Appoint Mechanism (OAM). For Malta, the designated OAM is the Malta Stock Exchange, while the National Competent Authority (NCA) responsible for the supervision will remain the MFSA.
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WHAT IS THE ESEF MANDATE?
The Standard ESEF (European Single Electronic Format) is the new single electronic reporting format for the preparation of annual financial reports to be published by listed companies in the EU from 2021 onwards.
This format requires one single file that will include the financial statements, the management report and the responsibility statements of the persons responsible within the company.
Companies who prepare consolidated financial statements, on the basis of International Financial Reporting Standards (IFRS), will also have to make the financial statements machine-readable, by tagging certain information in their financial statements in accordance with the IFRS Taxonomy using inline specifications (iXBRL).
WHAT DOES THE ESEF ENTAIL?
The ESEF is a technical standard format which will replace the current standard of using PDF and instead allows the document to be read in a web browser using XHTML capabilities. When browsing such a document, when reporting in IFRS standard, users may also tag and subsequently review ‘Inline XBRL’ (iXBRL) which provides a human readable component to what otherwise would be a technical and only machine-readable document.
ESEF therefore allows a mechanism for companies and regulators alike, to promote transparency, quality and easily compare annual filings with other companies due to the underlying taxonomy structure developed in line with accounting standards.