10 Things We Learned in a year
During the past 12 months companies all over Europe have been making their ESEF preparations, and now that the first European companies are starting to publish their 2020 annual reports in ESEF we have started to take stock of the past year.
At ParsePort we have spent the past year helping hundreds of European listed companies and auditors get a handle on the ESEF requirement by providing them with the tools and expertise to both map and convert annual reports to iXBRL as well as consume iXBRL reports.
While the ESEF preparations were affected by the global pandemic which even saw the requirement postponed in some countries, we have still learned several lessons which you can benefit from if you have yet to carry out your own ESEF implementation.
1. Start Small
Many solutions for ESEF reporting will include tools for creating your entire annual report, but if you are already satisfied with how you carry out your reporting process, it might be better to look at a solution which lets you convert your annual financial report to iXBRL after you have created it. After all, there is no reason to change the parts of your reporting process which already work.
2. Start Your ESEF Preparations Early
The early bird gets the worm, or so the saying goes. When it comes to ESEF preparations it is our experience that the companies who end up spending the most on ESEF reporting are also the companies who started their ESEF preparations closest to the deadline.
3. Collaborating with Your Auditor on Your ESEF Preparations Has Many Benefits
Your auditor is going to be at least one part of your reporting process, and because you will need them to review your ESEF report, you will also do well to make sure that your auditor possesses the tools to properly consume and validate your report.
While all auditors should have access to functioning validation tools, we have found that this is not always the case. Because of this, it may be a good idea to sit down with your auditor as part of your ESEF preparations, and find out how they intend to carry out the validation.
4. The Graphics Matter
While the ESEF mandate does not include graphic requirements aside from the fact that the report needs to be human readable, it is still something you should investigate when choosing an XBRL provider.
Many companies are very occupied with the mapping, because the mapping is what makes your report compliant, but even if that is the case, the bigger part of the people who will end up reading your annual report, will do so by looking at the visual representation.
This makes many of the non-blocking errors that can arise due to graphics more important than the ESEF mandate deems them. This can be anything from posts which are not aligned, to fonts which does not render properly.
Because of this, it is a good idea to take a close look at the graphic results of the XBRL conversion tool you plan to use, and to make sure that the conversion can be carried out with your own annual report.
5. Do Not Handle the Mapping on Your Own
Mapping is the prime focus of most companies we’ve spoken to, which is likely because it is the key requirement of the ESEF mandate. Another reason so many companies focus on the mapping, is because it needs to be flawless, which is why you shouldn’t handle the mapping process on your own.
There are several benefits to being involved in the mapping process, and it is by no means impossible to undertake the task on your own, but the sheer size of the ESEF taxonomy means that doing so without years of XBRL experience is going to be a time consuming and very costly experience, even if you successfully map the entire report on your first try.
The best way to achieve world class mapping, is to find an XBRL provider who can handle the technical parts of the mapping process.
6. Timing Is Key when Making Your ESEF Preparations
For many companies, the figures change many times leading up to the submission deadline, and because of this, last minute changes may be required, and naturally any ESEF solution should account for this. However, this is not always the case. Some solutions require your provider to carry out the conversion process for you, and if this is the case, there is a period from the moment you hand the report over to the provider and until you receive it back, where you cannot make any changes.
7. Choose Your Tool Before You Finalize Your Design
All ESEF conversion tools aren’t equal. Some tools have a hard time reproducing even simple designs if they aren’t made in a specific way. Because of this, it is a very good idea to pick your tool before you finalize your design choices. That way you will know what is possible and what isn’t possible with the tool you’ve chosen.
8. Compare as Many Vendors as Possible During Your ESEF Preparations
If you haven’t already, there is a good chance that several XBRL providers will contact you on their own, but there’s no guarantee that you will find the best possible solution in this way.
Finnish company Konecranes invited a number of ESEF providers to show off their products and perform a test conversion of the most resent Konecranes report, and on the basis of comparing the resulting files, Konecranes chose ParsePort as their ESEF provider.
9. You Will Learn How to Operate the Tools by Using Them
The best way to learn something is to do it. This also applies to ESEF reporting. Most of the companies we have spoken with after handling their ESEF conversion has said that the moment they knew they were on the right track with their ESEF reporting, was when they started using the conversion portal, so they could get to know it before things got real and they had to produce a report for publishing.
10. Proper Planning and Preparation Prevents Piss Poor Performance
The 7 P’s of the British Army isn’t just for soldiers – it also holds true in financial reporting. Planning was difficult enough before ESEF, when your communications and financial teams had to collaborate on a finished product, and now you have to add XBRL conversion to the mix.
One thing that will help your planning immensely, is to make sure that you can test run your mapping before you create a finished report. That way you won’t have to wait for the communications team to finalize the design before you can find out if your mapping and calculations are correct.
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