20.choosing The Right Software Hero

Choosing the Right Software for ESEF Compliance and Beyond

Transition to the European Single Electronic Format (ESEF) is mandated by the European Securities and Markets Authority (ESMA). Since 1 January 2020, companies listed on a regulated exchange in the European Economic Area (EEA) have needed to adopt a new framework for formatting and filing annual financial reports (AFRs) relating to financial years that started on or after that date.

ESEF is mandatory for all 7,500 listed companies and involves producing their annual report in a web-native XHTML format, rather than the more traditional downloadable PDF. It is also a trigger for listed companies to consider transitioning from manual to automated processes when working on their financial regulatory reporting.

How to streamline financial reporting for ESEF and beyond

Read more about the importance of automation in disclosure management

Watch an on-demand webinar about why last-changes to reporting can be a thing of the past

Beyond ESEF Compliance

But it’s important to note that it’s not just external regulatory reporting that you can improve by investing in disclosure management software. Listed companies also have to create multiple documents for internal as well external disclosure that include both numbers and narrative. From monthly board reporting to annual reports, and press releases to investor presentations, report content needs to be accurate and consistent, and there is no margin for error.

Yet how many times have companies needed to make late changes to reports and how easy is it to miss something small that can have huge consequences? How easy is it to forget to change a comparative word in one or more documents (e.g., ”increase” to ”decrease”) after a last-minute change to profit margin? Or to update the quarterly report and press release but forget to change the results deck? How common is it for internal and external reporting to be out of line?

For teams aiming to transition to an automated approach to narrative reporting, the introduction of ESEF represents an excellent opportunity to explore the benefits of standardised narrative report creation. This isn’t limited to annual financial reporting, but has applications across the whole gamut of statutory, management, and regulatory reporting; in fact, any recurring, multi-authored report that mixes numbers and text is a prime candidate. Examples could include:

  • Annual and Quarterly Reporting Treasury Reporting
  • Management Accounts
  • Regulatory Reporting (iXBRL, EDGAR)
  • Budget Books/Decks
  • Board Books/Decks
  • Business Unit Performance
  • Lender Reporting
  • Line of Business/Central Service
  • Function Reports
  • Project Management
  • Industry Specific Operational Reporting
  • Profitability Analytics – Customer, Geography, Channel

Improving Workflows

The necessity of investing in an iXBRL tagging solution for ESEF compliance purposes opens the door to investing in a solution that can streamline and add a layer of controlled collaboration to other aspects of report creation, too. This can range from importing and tagging source data to managing the workflow of who works on which part of the report, when.

The best solutions do this without creating too much disruption to the way the team works. They preserve the familiar Word, Excel, and PowerPoint interfaces that the team is familiar with. Meanwhile, they automate the time-intensive and error-prone work of sourcing, copying, and pasting data, and validating that they’re up to date, accurate, and consistent throughout the report.

Crucially, a preferred solution will have the ability to roll-forward reports to future accounting periods, including for example XBRL tags, thus increasing report production efficiency over time. The resulting time savings not only reduce the pressure on the team to get the report out of the door on time, but also means they can spend more time on the narrative and analytical elements of the report.

The Certent Disclosure Management Solution

Traditional internal reporting solutions and developed processes provide all the data that organizations need in a structured reporting format. They may also allow for minor commentary around certain balances. More often than not, however, data and minor commentary do not tell the full story behind the numbers. This is where Certent Disclosure Management (CDM) from insightsoftware allows companies to add value to the narrative process by bringing context to results and allowing decisions to be made using the full story behind performance.

Find out how Vodafone is using Certent to streamline financial reporting

Using Certent CDM, organizations can reduce the time spent creating internal and external narrative reports by up to 50 percent. They can produce and format regulatory, internal, and external reports working with the Office products they already know how to use. Then they can drive economies of scale by sharing content across multiple reports and distributing in multiple output formats, whether that’s Word, PDF, PowerPoint, Adobe InDesign, or XBRL/iXBRL. They can also save time and money by reducing proofing cycles with external printers and eliminating the 24-hour plus ”pencil-down” period.

Certent CDM enables organizations to always tell the most accurate story around their company results with confidence. Strong access controls and single sign-on ensure that only authorized users can change and approve narrative, while workflow controls streamline and expedite the production cycle.

In addition, checklists provide simple guidance to keep everything on track, while an audit trail lets teams see who did what and when. You can also use validation rules to tie out one part of the document to another part, or to a different related document, to accelerate the review cycle.

Certent CDM provides direct connectivity to source data, and the ability to add links to data items into narrative to ensure numerical content within text is accurate and consistent. It’s possible to refresh data at any time to automatically update report narratives as numbers fluctuate, reducing the risk of manual errors and allowing you to handle last-minute changes with far less stress.

The Way Forward

If you or your team are tasked with telling your company story on a periodic basis, you will know that this story is not told with only the numbers. Narrative is critical, and for public companies, it is a mandatory piece of the puzzle.

While we define this as financial disclosure reporting, both internal and external reporting are important to communicate your story to the public forum and your management teams. Production of these reports has historically been a very manual and disconnected process, involving the use of desktop applications. But Certent CDM helps bring automation, control, and confidence to the creation and distribution of these internal and external stories.

To learn about how Certent CDM from insightsoftware can help simplify compliance with ESEF and streamline report creation more broadly, download our ebook, ESMA’s ESEF: A Roadmap to iXBRL Compliance.

Esma S Esef A Roadmap To Ixbrl Compliance

ESMA's ESEF: A Roadmap to iXBRL Compliance

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