Committee of European Auditing Oversight Bodies – new guidelines for auditing ESEF-Berichten

Committee of European Auditing Oversight Bodies – new guidelines for auditing ESEF-Berichten

The Committee of European Auditing Oversight Bodies published revised guidelines for auditing ESEF financial reports on November 9, 2021.

Source: Committee of European Auditing Oversight Bodies, CEAOB guidelines on the auditors’ involvement on financial statements in European Single Electronic Format (ESEF), 09.11.2021, https://ec.europa.eu/info/sites/default/files/business_economy_euro/banking_and_finance/documents/211109-ceaob-esef-guidelines-auditors_en.pdf

DVFA opinion on the draft of a law for the further implementation of the transparency directive – amending directive with regard to a uniform electronic format for annual financial reports

DVFA opinion on the draft of a law for the further implementation of the transparency directive – amending directive with regard to a uniform electronic format for annual financial reports

On October 16, 20109, the German professional association of investment professionals (DVFA e.V.) commented on the draft bill for the further implementation of the transparency directive – amending directive with regard to a uniform electronic format for annual financial reports.

The objectives of the EU directive to improve the European capital market and the associated automation require valid data from the issuer; this cannot be achieved without technically enforced compliance with submission and validation rules!

Excerpt from the opinion of the DVFA e.V., Corporate Analysis Commission: “We therefore propose within the framework of the law: to authorize the Federal Gazette … to issue regulations on the “technical submission and validation rules” to be observed by the issuers. § 328 HGB, according to which these “technical submission and validation rules” must be complied with in the context of disclosure, as well as the right and obligation to impose the right and obligation on the Federal Gazette in § 329 HGB to check the ESEF data for compliance with the submission and validation rules and to reject them if necessary. “

DVFA e.V., Opinion on the draft bill of the Federal Ministry of Justice and Consumer Protection and the Federal Ministry of Finance – Draft of a law for the further implementation of the Transparency Directive – Amendment directive with regard to a uniform electronic format for annual financial reports from October 16, 2019

DVFA statement on the consultation of the EU Commission “European Single Access Point (ESAP)” – 2021

DVFA statement on the consultation of the EU Commission “European Single Access Point (ESAP)” – 2021

The DVFA e.V. responded to the the consultation of the EU Commission in January 2021 on“European single access point (ESAP) for financial and non-financial information publicly disclosed by companies” The Company Analysis Commission, of which I am a member, has given a detailed opinion on this. The statements of the various stakeholders are available on the website of the EU Commission

Excerpt from our statement:

Actually, it is relatively inefficient to use regulators` portals to gather information. Therefore financial analyzer are avoiding using such portals. In order to radically increase the transparency of capital market information, automation is one key – among others. This means that ESAP should provide appropriate interfaces to access ESAP by computer programs and to download the information automatically.

In addition, we recommend the EU commission to carefully investigate actual ESEF-obstacles. For example, “valid ESEF data” is another key to increase capital market transparency in the EU. However today ESEF data usably are not NOT VALIDATED at the OEMs. Although this is technically possible. validation (for example XBRL-validation) is mandatory for filing XBRL reports at the US SEC, since it`s beginning . At this point, one key obstacle is that the ESEF mandate does NOT include a mandate for the OEM to validate ESEF data. In addition, the technical implementation could be simplified by setting up a “open source ESEF validation engine”, which OEM have to integrate in to their national platforms. This would guarantee valid data, using the same validation rules EU-wide. In addition, this would be cost efficient for OEMs.

EU – Maßnahmenpaket zur Finanzierung nachhaltiger Aktivitäten

EU – Maßnahmenpaket zur Finanzierung nachhaltiger Aktivitäten

On April 21, 2021, the European Commission adopted a package of measures designed to help improve the flow of money for sustainable activities across the European Union.

    • EU Taxonomy Climate Delegated Act:
      This aims to support sustainable investment by defining which economic activities contribute most to the achievement of the EU’s environmental objectives. [Note: The term “taxonomy” is NOT used here in the sense of the term “XBRL taxonomy”]
    • Corporate Sustainability Reporting Directive (CSRD, proposal) A proposal for a corporate sustainability reporting directive (CSRD). This proposal aims to improve the flow of sustainability information to financial companies and investors (comparable and reliable sustainability information)
    • Finally, six delegated amendment laws on fiduciary duties, investment and insurance advice are intended to ensure that financial companies, e.g. consultants, asset managers or insurers, incorporate sustainability information into their processes and their investment advice for clients.

It is of particular importance that the target group of the Corporate Sustainability Reporting Directive affected companies goes far beyond the companies listed on the European stock exchanges (around almost 6000) and also affects “larger” companies – allegedly around 50,000 companies (more informations).

Source: European Commission, press release “Sustainable Finance and EU Taxonomy: Commission takes further steps to channel money towards sustainable activities@, 21.04.2021, https://ec.europa.eu/commission/presscorner/detail/en/ip_21_1804

EU Commission: proposal for a directive on sustainability reporting by companies

EU Commission: proposal for a directive on sustainability reporting by companies

The commission has adopted a proposal for a directive on corporate sustainability reporting (CSRD), which would change the existing reporting obligations under the “non-financial reporting directive”. The proposal for a directive

    • extends the scope to all large companies (more than 500 employees) and all companies that are listed on regulated markets (except for listed micro-companies),
    • requires auditing the reported information,
    • introduces more detailed reporting requirements and a reporting requirement according to the binding EU standards for sustainability reporting,
    • requires the information in digital form – “digital tagging” – so that it is machine-readable. The guideline explicitly refers to the “digital tagging” introduced in the context of financial reporting data with ESEF – European Single Electronic Format (see guideline loc. Cit., Footnote 15).

According to this proposal, future sustainability reporting will be carried out on the technological basis of iXBRL / ESEF (draft directive, see paragraph 48 and Article 19d).

The publication of the sustainability reporting is to take place centrally via the new European Single Access Point (ESAP).

Source: European Commission, Mitteilung Sustainable finance package, 21.04.2021, https://ec.europa.eu/info/publications/210421-sustainable-finance-communication_en; European Commission, draft directive, 21.04.2021, https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52021PC0189&from=EN