iXBRL: When, what and how? | KPMG | UK

iXBRL: When, what and how?

iXBRL: When, what and how?

Insight into the 2020 EU electronic filing requirement that’s set to affect groups with equity or debt listed on an EU regulated market.

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New additional requirement for listed companies to file their consolidated annual financial reports electronically in iXBRL.

A new EU electronic filing requirement is coming into force in 2020 that will affect groups with equity or debt listed on an EU regulated market. In
this article we explain what this involves based on current proposals.  As an EU directive, this is subject to how Brexit unfolds!

The EU Transparency Directive already requires companies with equity or debt listed on an EU regulated market to publish their consolidated annual financial reports (AFRs) each year on their website. Currently, this requirement is generally met by uploading the reports in PDF format. From 1 January 2020, to meet the requirements of the EU Transparency Directive, the reports will have to be prepared and filed in the European Single Electronic Format (ESEF). 

The European Securities and Markets Authority (ESMA) is responsible for setting the requirements for ESEF. It undertook a formal consultation exercise in early 2016 and issued proposals. They are currently gathering feedback and undertaking testing work before publishing a draft regulatory technical standard in early 2018. In the UK these rules and the detailed filing requirements will likely be implemented by the FCA and the documents are expected to be filed with them, rather than merely uploaded on a company’s website. KPMG has been looking at the developments.  

Proposed requirements

The proposals as presented and discussed are:

  • From 1 January 2020* all companies in the scope will be required to publish their consolidated AFRs in an xhtml format i.e. a web format.
  • In addition, companies preparing their consolidated AFRs under IFRS (or an equivalent GAAP) will need to include iXBRL tagging using the IASB’s taxonomy.

* ESMA have recently identified ambiguity in the amended Transparency Directive which suggests they will introduce ESEF for accounting periods starting on or after 1 January 2020 rather than for filings from this date. This will be clarified in the draft regulatory technical standard. 

What is the impact?

There will be no requirement for additional financial information in the AFRs; the ESEF solely introduces an extra format for the information when uploaded. This will require a supplementary process to be included in the reporting timetable.

The PDF has been a popular format for AFRs for many years. Accounts printing firms are generally used to create an AFR document to ‘tell the story’. Although we expect the PDF to continue, in practice, companies will be required to file or publish a version of their AFRs in xhtml (web format) and use software or a provider to tag the document which will add complexity to the filing process.

Initially the tagging requirement for the xhtml version is not too onerous as it is limited to the consolidated primary financial statements (Income Statement, Statement of other Comprehensive Income, Balance Sheet, Cash flow statement and SOCIE). However, companies will need to extend the
taxonomy, (i.e. new tags) where the IASB’s taxonomy coverage is insufficient. After two years we expect high level
tagging of notes being also required. 

Existing experience

Most UK groups have experience with iXBRL documents for the purpose of HMRC filings (now in its 7th year).  It is worth noting however, that there is no overlap with the HMRC requirements. The ESEF will require different
tags and will focus on the consolidated figures rather than individual entity
ones which are relevant for HMRC.

Some of the companies caught by ESEF will already be looking at similar (but more complex) requirements for their 20-F filings in the US from 2018 onwards, so should be able to encompass ESEF with this.  Both requirements use the IASB taxonomy and we expect services and software for 20-Fs to encompass ESEF too.

The details above are from an ESMA presentation made this summer and are not published. They are subject to change when the draft regulatory technical standard is published.

KPMG is working with clients on ESEF and would be happy to discuss this with you.  

 

Marshall Matthews

Senior Manager, Tax, KPMG in the UK

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