Lou Rohman, Vice President, XBRL Services, Merrill Corporation | January 04, 2017
XBRL Requirement Announced for EU Public Companies
After significant consultation and feedback, a conclusion was finally reached; public companies in the European Union will be required to submit digital annual financial reports using eXtensible Business Reporting Language (XBRL) – specifically the Inline XBRL format.
Timing of requirement and initial scope of companies
According to the European Securities and Markets Authority (ESMA), the XBRL requirement will start on January 1, 2020, and initially will apply to reports containing IFRS consolidated financial statements. ESMA stated that, at a later stage, the requirement may be extended beyond IFRS companies and also to additional financial areas.
IFRS Taxonomy will be used for tagging
ESMA also declared that the IFRS Taxonomy, as published by the IFRS Foundation, will be the base taxonomy used for tagging the financial information. This is a prudent decision since the IFRS Taxonomy is produced by the same group that produces the IFRS accounting standards and is developed using a formal system of due process. The IFRS Taxonomy is an accurate representation of the IFRS standards as issued by the IASB, and it’s a global standard. Therefore, it makes sense for the IFRS Taxonomy to be the foundation of the electronic reporting requirement.
Key takeaways from ESMA’s feedback statement
ESMA’s December 2016 announcement came via a feedback statement, which was the result of a consultation launched in September 2015. It appears ESMA did their homework based on the details and length of the 245 page document, including appendices.
If you’re unable to read it all, the keys points are mentioned above, along with two other takeaways. One is that the EU is clearly moving forward with digital financial reporting, especially the Inline XBRL format since it is both human-readable and computer-readable (see my previous blog). And two, there will be more action to come; the document says that ESMA will be focusing on detailed technical rules and will submit them to the European Commission for approval around year-end 2017.