20 Jun 2022
| Par Siong Ho Wang Yin, Chartered Accountant and Partner | SIKIMA AUDIT ET CONSEIL

Insights from Siong Ho Wang Yin, Founding Partner of Paris-based audit and consulting agency, SIKIMA CONSEIL.

  • ESEF Reporting
  • Invoke ESEF

After the tagging of the financial statements...

Most companies listed on the regulated market (excluding companies with a non-calendar financial year) have filed in accordance with the ESEF electronic reporting format. Where companies were given the choice to postpone the ESEF in 2021, the vast majority of them filed for the first time in 2022. Issuers that had anticipated this new requirement to the greatest extent possible - preparing the mapping of their consolidated financial statements, choosing a solution and getting training on its use, doing a dry run with their national market authority and an early review by the statutory auditors - were able to approach the last year-end closing with confidence.

... comes the block tagging of the notes

However, the requirement for electronic ESEF reporting does not stop there. The notes will have to be "block tagged" for financial years beginning on or after 1 January 2022.

Issuers need to go back to their 2021 accounts in order to anticipate the 2023 filings for the 2022 financial year. Indeed, the requirement is not simple: where to find the taxonomy, which tags to use, what level of granularity to use in the choice of tags between, for example, DisclosureOfGoodwillExplanatory and DisclosureOfIntangibleAssetsAndGoodwillExplanatory, and whether or not to create extensions.

Discussions between experts, issuers and regulators are underway on the various subjects that are emerging. These discussions will enable common pragmatic positions to be adopted. However, as with the mapping of primary financial statements, an initial dry-run mapping of the notes seems to be the best practice for anticipating the points of discussion.

More than an accounting issue

Beyond the accounting challenge, the choice of the "tool" or production solution remains relevant. Issuers will have to consider the ability of the tools they have chosen to insert block tags easily, to manage iterative versions of notes while maintaining applicable block tags and to identify new tags easily, since not all solutions (tools or outsourcing) have the same level of flexibility and ease of use.

The "dry run" is the best solution to ensure the efficiency of this process, given the time constraints for producing accounts.

Anticipation and coordination

Anticipating block tagging is important, but coordination between the various parties involved - ESEF specialists, statutory auditors, consolidation department, publishers, legal departments - will be necessary to implement this extended tagging.