European Single Electronic Format
While the Government, the FRC, the IIRC and report generators such as RY are encouraging further transparency and clarity in reporting, there is a further future complication in the form of ESMA’s European Single Electronic Format for reporting.
The proposal, which will become regulation as of January 2020, requires companies initially to file an XHTML document for the entire annual report and XBRL tagging of the primary financial statements. UK listed groups do not currently have any XBRL or iXBRL filing requirements, except for their tax returns.
The legislation is being driven by Europe, but Britain’s decision to leave the EU is unlikely to prevent it. The new requirement will be implemented as an aspect of the updated Transparency Directive, which has already been transposed into UK law. That means reporters with a December year end have two more reporting cycles before they stop filing a PDF and start filing an electronic report.
Regardless of whether this initiative offers any benefits, it raises a number of practical issues. Some companies may choose to produce a full PDF and extract the copy to file electronically. At the opposite end of the scale, others may decide to produce an electronic report and embrace a ‘digital first’ stance, which will involve overhauling their entire reporting process.
Whichever approach they adopt, there is also the small matter of finding enough coding capacity to deal with such a huge change. And how will companies approach communication in the new environment? Will they embrace the drive for further transparency or take the simpler route towards a US SEC EDGAR type reporting environment?
So, the reporting landscape shifts yet again. Many of these initiatives are for the better, especially the renewed emphasis on providing a wider discussion of performance beyond financial return. Of course, much of this will cover familiar ground for the UK’s most accomplished reporters – but what a shame that the timing of the FRC consultation couldn’t have been as sensible as the thinking behind it, and with a clear direction of travel coming from future regulation.
Read the full article in Financial Director