Listed companies¹ published their annual financial reports (AFRs) for 2021 in ESEF format (European Single Electronic Format). The adoption of ESEF is mandatory for financial periods starting on or after 1 January 2021.

ESEF refers to an xHTML format AFR in which IFRS consolidated financial statements are marked up with XBRL tags. The consolidated financial statements file containing XBRL tags must be packaged as a zip file. If a company only prepares the financial report of a stand-alone entity, and no IFRS consolidated financial statements are involved, the required reporting format is xHTML, not packaged zip format. It is not necessary to report XBRL tags for a stand-alone entity, in which case zip format becomes unnecessary in practice².

ESMA’s recommendations support reporting

On 24 August 2022, ESMA published an updated ESEF Reporting Manual, which can be applied when reporting AFRs for 2022. ESMA’s manual is not binding; it has been prepared to support the application of the ESEF regulation in a situation where binding regulation (ESEF RTS) do not give precise instructions on reporting. The Financial Supervisory Authority (FIN-FSA) encourages listed companies to follow the manual’s recommendations.

Considerations for publishing ESEF files

All listed companies that published ESEF format AFRs also published them in pdf format. Only some of the companies’ pdf format AFRs indicated that they were published voluntarily.

The disclosure requirement pursuant to chapter 7, section 5 of the Securities Market Act is fulfilled only by an ESEF format AFR and therefore AFRs should not be published only in the voluntary pdf format. A published pdf format AFR should indicate that is has been published voluntarily and that it does not fulfil the requirements of chapter 7 section 5 of the Securities Market Act. A recommendation regarding this practice is also included in ESMA’s manual (Guidance 1.0.2).³

The listed companies published ESEF and pdf format AFRs for 2021 at the same time with the same stock exchange release. The updated ESMA manual also takes a position on situations where, for justified reasons, the publication of documents in pdf format could take place before their publication in ESEF format (Guidance 1.0.2.a). If the publication of a pdf format AFR is published with a stock exchange release, these documents are also stored in the OAM (central storage facility for regulated information).  

The companies made various choices as to whether they published the AFR merely in xHTML format, or whether the AFR in xHTML format was part of a larger annual report package. Some companies mistakenly only had the financial statements in xHTML format, and the report of the Board of Directors might be a separate pdf document. The FIN-FSA reminds issuers that the ESEF regulation apply to both the financial statements and the report of the Board of Directors, i.e. both documents must be in the same xHTML file. Wider xHTML content is also possible. The XBRL tagging requirement only applies to IFRS consolidated financial statements, however.

Chapter 10, section 3 of the Securities Market Act obliges issuers to make ESEF format AFRs available in their website. The FIN-FSA found a few aberrations in the compliance with this requirement. Companies are requested to pay attention to compliance with the requirement.

The FIN-FSA reminds issuers that published ESEF data cannot be altered afterwards. Changes to an ESEF format AFR can only be made by publishing the AFR again. It is therefore not permitted, for example, to change the XBRL tags of a published ESEF format AFR in the company’s own website.

Most ESEF reporters used the LEI code in the name of the zip file. ESMA’s manual permits the use of both the LEI code and the company name or an abbreviation of it. There is therefore currently no binding rule on the use of the LEI code. The FIN-FSA, however, recommends the use the LEI code.

Companies are responsible for quality of reported information

The ESEF reports of European companies and their related findings can be viewed in the information service maintained by XBRL International, which has also published a series of blogs on the subject. The 2021 ESEF files of several European listed companies had quality problems, which may adversely affect the usability of XBRL format information.

The FIN-FSA observed errors in the ESEF format AFRs of some companies that completely prevented the reading or viewing of electronic information with viewer software. The FIN-FSA has urged these companies to correct and publish the ESEF file again.

The FIN-FSA will not carry out planned enforcement of the machine-readable part of ESEF format AFRs (xHTML/iXBRL), but will react, if necessary, retrospectively to any significant errors in ESEF files that may arise in the market. In Finland, the OAM, Nasdaq Helsinki, also does not perform validations on ESEF files.

The FIN-FSA emphasises that the companies are responsible for the quality and usability of the information they report.

Assurance of ESEF format annual financial reports

Auditing and assurance of the machine-readable layer of ESEF format AFRs is not regulated in Finland. Although there is no assurance obligation in Finland, a company may voluntarily obtain assurance of this. The Finnish Association of Authorised Public Accountants has issued a recommendation on the assurance of listed companies' ESEF annual financial reports (in Finnish).

Chapter 7, section 8, subsection 4 of the Securities Markets Act contains a provision, which entered into force on 1 January 2021, on the obligation of an issuer to publish an auditor’s statement on ESEF format AFRs⁴. According to the provision, if the issuer’s auditor has audited an AFR prepared in accordance with the Commission’s technical regulatory standard, the auditor shall state in its statement the extent of the work performed. The statement of the auditor shall be appended to the AFR in question.

Around 100 companies out of just over 140 companies published an assurance report in accordance with the requirement. The assurance reports on the ESEF format AFRs were separate reports, and they were not, for example, part of the audit report. Just under 10 companies said that they had obtained an ESEF assurance report, but they did not, however, publish the said report as the provision requires.

No assurance or audit was obtained for the ESEF format AFRs of around 40 companies. Pursuant to chapter 7, section 8, subsection 5 of the Securities Market Act, if an issuer’s auditor has not assured or audited an AFR prepared in accordance with the Commission’s technical regulatory standard, the issuer must declare this in the AFR in question. Fewer than 10 companies declared in the ESEF format AFR the absence of an assurance report as required by the provision.

ESEF regulation themselves do not take a position on the location of the ESEF assurance report. In Finland, the most common practice adopted has been that both the audit report and the separate ESEF assurance report are in the same xHTML format document, which also contains the AFR. This practice is still possible, as is the practice that the audit report and the ESEF assurance report are not included in the xHTML file containing the AFR, but are appended as a separate file to the stock exchange release.

FIN-FSA’s contacts with companies

The FIN-FSA has been in contact with a number of companies with regard to which it has found shortcomings in the publication of ESEF format AFRs and the auditor’s assurance report. After being contacted, some of the companies have published their ESEF files again, for example if it was not possible to read or view the machine-language information of the initially published file with viewer software or the xHTML/zip file was inadequate. In the majority of contacts, the companies were urged to take into account the regulatory requirements in connection with the next reporting.

New guidance in ESMA’s updated manual

XBRL tagging of notes to financial statements with block tags is mandatory for reporting periods beginning on 1 January 2022 or later. The updated ESMA manual contains, among other things, new guidance on and examples of block-tagging (section 1.9). The key content of the block-tagging guidance relates to the situation where there are one or multiple taxonomy elements that can match a given disclosure. In that case, according to the manual’s guidance, preparers should use all the elements of different granularity and multi-tag the information to the extent that corresponds with the underlying accounting meaning of the information.  

The manual also contains new guidance on language versions (Guidance 1.1.2) and the above-mentioned presentation of AFRs in other formats than ESEF (Guidance 1.0.2). With regard to language versions, the ESMA manual⁵ recommends that a language version other than the official language version⁶ should be indicated with the notation “non-official version” and/or “translation”. This applies to both ESEF and pdf format AFRs.

When reporting the 2022 financial statements, companies may use the 2021 taxonomy or the 2022 taxonomy, which will be published later this year⁷. See Final Report on the draft RTS 2022.

For further information, please contact:

• Riitta Pelkonen, Senior IFRS Accounting Expert, riitta.pelkonen(at)fiva.fi
• Minna Toiviainen, Senior Market Supervisor, minna.toiviainen(at)fiva.fi
• Riikka Kantola, Reporting Expert, riikka.kantola(at)fiva.fi

¹ In this article, the term ‘listed companies’ covers issuers whose shares or bonds are admitted to trading on a regulated market in Finland (Nasdaq Helsinki).
² Instructions (Guidance 4.1.1) for a situation in which the financial report of a stand-alone entity may also be packaged in zip format have been added to section 4.1 of ESMA’s ESEF Reporting Manual 2022.
³ Guidance 1.0.2, which contains more detailed instructions on the publication of AFRs in other formats than ESEF, i.e. in practice pdf format, has been added to ESMA's ESEF Reporting Manual for 2022.
⁴ In chapter 7, section 5 of the Securities Market Act, ESEF annual financial report is referred to by the term financial statements prepared in accordance with the Commission’s technical regulatory standard.
⁵ Guidance 1.1.2 AFRs presented in more than one language, paragraph b for voluntary language version as in Finland.
⁶ In Finland, the official language versions are Finnish or Swedish (Securities Market Act, chapter 10, section 4).
⁷ Final report on ESEF draft RTS page 6: In order to minimise the burden for preparers, this amendment to the RTS on ESEF is mandatorily applicable for financial years beginning on or after 1 January 2023. Early application is allowed. Therefore, it is expected that for annual financial reports including financial statements beginning on or after 1 January 2022, issuers will be allowed to use either the 2021 ESEF taxonomy or the 2022 ESEF taxonomy introduced by this draft RTS.