Paris, June 14 2022. With the introduction of the European Single Electronic Format (ESEF) for the annual financial reports of listed companies, the European Parliament aims to improve the transparency of the capital markets, especially for small and medium-sized listed companies, to reduce information costs and to enable comparability of financial reports, among other things.

These goals can only be achieved if listed companies apply ESEF uniformly in Europe and it is technically ensured that a minimum quality is maintained. In my opinion that is not the case at present.

The reasons for this situation lie in particular in legal gaps, as the German Association of Investment Professionals (DVFA) has communicated several times in public statements. I already described this obvious problem in my article for the German Börsenzeitung in 2017. An EU-wide harmonization of the legal gaps is necessary so that the necessary technical measures can be taken based on this.

The situation is “multidimensionally complex”:

• In the 27 member states there are many different stakeholders: ESMA, differenz authorities/OAMs, issuers, software companies, auditors and data users
• different national laws relevant to ESEF submission + EU ESEF regulatory framework
• a variety of IT-technical topics that require deep accounting expertise
  such as: tagging, block tagging, company specific extensions, anchoring, validation (scope, enforcement), filing rules, single source of truth, data distribution, country specific extensions, industry extensions

Under the title “The complexity of ESEF harmonization” I visualized the problematic situation in a 3D cube at the 30th XBRL Europe Conference in Paris from June 13th to 14th. It shows the legal and technical challenges we now face in Europe. At the same time, alternative measures can be developed, weighed up and discussed in view of this complex situation.

Source: Bodo Kesselmeyer, The complexity of ESEF harmonization, slide number 7 in the presentation “Update from XBRL Europe BPTF”, subgroup gathering best practices, Paris, 13-14 June 2022.