How to Prepare for ESEF Text Block Tagging?
Starting in the financial year 2022, ESMA requires all issuers filing IFRS consolidated financial statements to block tag the notes in their annual financial reports with XBRL tags. Mandating text block tagging in phase II of ESEF reporting allowed issuers the time to get acquainted with iXBRL technology in phases. Now that it’s time to transition into the second phase of the mandate, it is important to understand how companies can prepare for ESEF text block tagging.
Wondering whether you need to prepare for the phase II mandate after complying with the phase I mandate for a year? The answer is YES! Why? Because the level of tagging in the phase II mandate is different and advanced from the phase I mandate. Issuers are expected to follow the guidance provided in the reporting manual when preparing their 2022 annual financial reports.
Delving deeper.
Steps for Text Block Tagging Preparation
The following are some ways to help you prepare for ESEF text block tagging:-
1. Have the Text Block Mapping Ready: Mapping is the process of choosing the right elements from the taxonomy that matches the facts stated in your annual financial reports. To have your text block mapping ready, find the notes in your reports that match elements from Annex II, Annex IV, and custom elements. Furthermore, you should decide the block tagging granularity level you want to follow.
2. Ensure the Fitness of the Input PDF: It helps match the PDF items to the suitable iXBRL standards. You can ensure the fitness of the input PDF by the following:-
- Ensure consistent use of fonts in your annual report
- Avoid font tampering function in the PDF
- Ensure there are no hidden layers in the input PDF
- Avoid adding tables as images
- Ensure that the content order in the PDF fits the XHTML requirement
3. Ensure the Readiness of the Tagging Solution: You should choose a tagging solution or service that can handle different types of tagging, such as:-
- Text block roll forward
- Nested tagging
- Multi-tagging
- Continuation tagging
- Exclude tagging
4. Ensure the Readiness of the Audit Solution: An effective audit solution helps file a properly tagged output with ESMA. Before block tagging your annual reports, make sure that the audit solution is updated to:-
- Easily view continuation, nested, and multi-tagging
- View the tagged content as per the reporting manual
- Provide a comprehensive validation report that includes all the latest ESMA rules
5. Have a Preparatory Tagging: It is an effective way to prepare for ESEF text block tagging. During this sample tagging, you can check the factors mentioned above and identify if there are any gaps to be addressed. This process will help you take corrective actions at an earlier stage, saving a massive amount of time during filing with the regulator.
6. Validation With the Regulator: National level regulators provide a test filing facility for issuers. Conduct a test filing with your regulator using the sample tagging process to become familiar with the process. Do a test filing with your regulator following the sample tagging process to get acquainted with the process.
What are the Next Steps?
Due to new and advanced ESMA requirements in phase II of the mandate, text block tagging may seem overwhelming. However, fret not! One effective solution to error-free block tagging is outsourcing your ESEF requirements to a trusted partner. With a prior experience in block tagging, DataTracks can be your best choice for adapting to phase II of the ESEF mandate. Get in touch with a DataTracks expert @ +31202253702 or email enquiry@datatracks.eu to know more about our services.
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