XBRL 101: An effective start to your ESEF reporting

ESEF reporting

Webinar review

Back in 26 January and 9 February 2022, we hosted the XBRL 101 webinars: What to know before you start your XBRL journey. We want to thank everyone participating in these webinars.

We at Global Connect Consultancy wish to share our XBRL tips and tricks, so that you may gain insights regarding your company’s XBRL journey. We published the webinar to our YouTube channel. In case you would rather read the contents of the webinar instead of watching the video, we typed out the script for your convenience.

On 23 February 2022 at 13:00 – 13:30 CET we provide an Amelkis XBRL demonstration. We recommend watching the XBRL 101 webinar first if you are new to XBRL or would like a ‘refresher.’ Feel free to join the Amelkis XBRL demonstration if you have questions regarding the XBRL software application. In March 2022, we will make the demonstration available to watch on YouTube as well. For individual demonstrations, please contact us to plan a meeting.

Why XBRL is necessary for your financial reporting

With every business, there is financial reporting. Every year companies deal with everchanging developments in their annual reporting. The worldwide COVID-19 pandemic had and will continue to have a massive impact on fiscal health and business developments. Yet, European authority ESMA declared the ESEF format mandatory from 2022 onwards.

The big question is, will ESEF, the European Single Electronic Format, and XBRL, the Extensible Business Reporting Language, make financial reporting more beneficial? In Europe, listed companies that prepare their annual reports in IFRS or US GAAP are now mandatory to report in XBRL. The implementation of ESEF means that companies now have to deal with matters such as XBRL tagging and ESEF taxonomy. Taxonomy and tagging open a world of opportunities for business reporting and transparency reporting. However, how do you ensure you implement taxonomy and tag your documents accurately and therefore succesfully? 

Companies, therefore, now face their first (or second) ESEF reporting. With any new developments, a good start is half the battle. Can we now expect more transparency in financial reporting, or will comply with (inter)national laws become the most significant challenge? Why do tags and taxonomy matter? How can you benefit from XBRL-related software and services? In 20 minutes, Global Connect Consultancy answers these questions. It is easy to overestimate or underestimate the power of XBRL, so we wish to assist you with your XBRL journey. 

With this webinar, we want to assist companies that want to start with XBRL or wish to discover what their XBRL journey looks like. In case you have started with your XBRL process yet encounter challenges or want a quick refresher, then this webinar is for you as well.

In this webinar, Global Connect Consultancy explains:

  • What is (the importance of) XBRL?
  • What are the advantages of XBRL software?
  • What are the main challenges companies currently face when dealing with XBRL?
  • How are Global Connect Consultancy and Amelkis XBRL your XBRL software solution?

Rewatch the XBRL 101 webinar

Script

Hello and welcome to our webinar, XBRL 101: What to know before you start your XBRL journey. My name is Henriëtte van der Roer, and I’m from the marketing department at Global Connect Consultancy, and today i hope to share some insights on how you and your company can work on your XBRL process.

Before I continue I would like to explain the webinar outline to you. So in about 20 minutes I’ll first introduce ourselves and our partner, Amelkis Solutions. Then I’ll answer the big question: What is XBRL and why is it important? I’ll continue with giving you advantages of XBRL and XBRL software, followed up with two main challenges companies face when dealing with XBRL. Afterwards I’ll give you an example on what your XBRL journey could look like if you were to choose for our software and services, and I’ll end the webinar with a short conclusion.

So, who are we? Well, Global Connect Consultancy is a consultancy office in Amsterdam and we assist companies worldwide with all matters in XBRL, consolidation, intragroup and lease processes. Companies tend to choose for us for our flexible personalized and intercultural service as well as our offers in complete software and service solutions.

Our core business is mainly in software and software-based service. With our software adjustment we make sure that the software is adjusted to the needs of your company, so it fills in the missing gaps. We also provide software training so that you and your team can either work independently or together with us in your business processes. The software is all powered by Amelkis, and is software in XBRL, consolidation, intragroup and lease. We also share an extensive background and expertise in various matters. Think of annual reporting, consolidation, intercompany and transfer pricing, and international and national accounting standards, think of IFRS and US GAAP.

So let me now introduce you to our partner Amelkis Solutions. Amelkis is a financial software publisher located in Paris. They assist companies worldwide with all matters in XBRL, consolidation, reporting and IFRS 16. Companies chose Amelkis because they have standards for all reporting needs as well as complete software and service solutions. They even strengthen major audit firms such as PWC and KPMG. Every year over 3000 groups implement the innovative Amelkis software solutions. We are a proud Amelkis partner and share the same main goal for our customers: Ensuring you are confident in your financial reporting.

So now we have arrived at the big question: What is XBRL? Well, what if I told you XBRL conceals a wonderful concept? XBRL stands for eXtensible Business Reporting Language, and is an open standard for compiling and exchanging business reports and financial data. It is a language in which computer systems communicate with each other. Applicating XBRL has significant advantages for anyone who supplies, processes, analyzes and communicates business information. At the moment XBRL is mandatory for listed companies who prepare their annual reporting in US GAAP and/or IFRS.

So now I have explained what XBRL is. so you might wonder: Why is XBRL important? Why should it matter to me? XBRL has many benefits, for example it assists you with handling increased pressure from auditors when you’re dealing with your financial statements. It’s no secret that especially during deadlines there’s a lot of stress. Time management is short and you have to deal with auditors. XBRL helps you to be on top of your data so you can make better strategic decisions and also prepare for what’s happening. It also improves communication within your group but also outside of your group. XBRL is meant for internal and external reporting of data so everyone sees the factual numbers and data, and then can act on this.

I could continue about the technical aspects of XBRL, however, I think it’s beneficial to show you the advantages of XBRL and XBRL software.

The first advantage is the tagging. As I mentioned earlier XBRL is an open standard for compiling and exchanging business reports and financial data. We all have experienced what typos and miscalculations can do to your documentation. However, with XBRL, you label your data with tags and with these XBRL tags and with XBRL software, typos are a thing in the past.

The second advantage is your role in ESEF compliance. With your XBRL tags you need ESEF taxonomy. ESEF is the European Single Electronic Format, which is made possible by the European authority ESMA. This electronic format plays a significant part in annual reporting. XBRL software has a built-in validation system. For example, you label or tag your company chart of account to the ESEF chart of account. This self-validation function applies validation rules and checks data effortlessly, and inconsistencies are ruled out immediately.

The third advantage is you save much time. XBRL is a life saver when it comes to automating the audit trial. With XBRL you can easily retrieve the origin of your data through a logbook on all levels. XBRL characterizes data with its source and then records the processes throughout their lifecycle. You can now save much time because you do not need to refer to documents and search in source systems manually anymore.

The fourth advantage is that you can create meaningful data. Adding notes in XBRL goes further than just tagging numbers. You can also give meaning and context to texts. The explanation of texts in your financial reporting are vital since these can color black data red.

The fifth advantage is that you increase data. Quality much quality is often lost in ambiguity an inconsistent interpretation of reporting requirements xpiral forces the requestor to harmonize concepts and make the delivery more consistent this results in a better analysis

The sixth advantage is you can quickly exchange your data. You do not need to endlessly browse and retype without certainty anymore. You provide your data, for example a financial report, then the receiving system can effectively extract the necessary information. XBRL enables real-time sharing and exchanging data becomes more transparent than ever.

The seventh advantage is that you regain control over your data. XBRL is multi-dimensional with an hierarchy in data. This means there is more coherence with data and that many more analysis are possible. You can now deep dive into your data from a consolidated level. In case of uncertainty, XBRL software displays the explanation with a simple click away, and the definitions are available on demand.

The eighth advantage is your role in compliance. XBRL is a new way of analysis, particularly in the market analysis, fraud and error detection and compliance, xbrl expands the analyst field of view significantly.

The ninth advantage is that you increase investor interest. With XBRL-related software packages and services you can make comparable reports between your organization and external organizations. This is useful for investors and professional analysts as well as for companies that want to compare themselves with their peers. If this is something you’re looking for be sure to let us know so that we can assist you.

And lastly, the tenth advantage is that you can effectively streamline your business communication. Although XBRL started as a language for external reporting, it became abundantly clear that it also has many advantages for internal reporting. You can implement XBRL on any computer device since the standard carries its structures. XBRL externalizes data structures on which your business software is based and enables smooth data transferring. If your company combines different business systems you can make these talk to each other through XBRL.

I have now given you quite some examples of benefits of XBRL and XBRL software. However with any benefits there are always some challenges. So now let me give you two main challenges companies currently face, and then let me tell you how to prepare for these challenges and perhaps even prevent them.

The first challenge is the tagging. As I mentioned earlier, tagging is attaching a label to data. You can tag in two ways: Automatically and/or manually. Both methods give you benefits to having control and insights over your financial data. Which method you implement simply depends on what is most convenient for you and your company. So let me give you an example. When our clients wish to implement automatic tagging, we implement Amelkis XBRL, and then select data to then link this data to an element from a taxonomy. After automatic tagging is set up your tags are already corresponding to the data in your source system. If you or someone else changes the data a month later, the tag stays the same and the context changes automatically. This will eliminate a lot of stress, especially when compliance deadlines are near. Meanwhile, if you feel the deadlines are coming too close and will be very challenging to commit to compliance, you can always ask us for last minute tagging assistance. Whether it’s days or weeks beforehand we will gladly help you out.

The second challenge is with compliance. Depending on who you ask, transparency is either a blessing or a curse. Transparency plays and will continue to play a significant part in financial reporting. With Amelkis XBRL however, you do not need to worry about transparency, inconsistencies and compliance anymore. So let me explain. By linking your tags to taxonomy you will automatically recognize inconsistencies earlier and then successfully commit to transparency. Amelkis XBRL also immediately checks and validates your documentation. This means whenever ESEF taxonomy is updated, Amelkis XBRL is also updated. In case the existing taxonomy does not fully reflect your data, you can create your own taxonomy, also called ‘taxonomy extensions.’ By doing this you do have to explain the reasoning behind your custom taxonomy. However, it is an innovative way to make your financial reporting more transparent than ever. Also, feel free to ask us for any assistance in reviewing your custom taxonomy.

Let’s say you are ready to start your XBRL journey and you’ve chosen for us. Well, I would like to explain how to get started with Amelkis XBRL (the software), and then what type of services you can expect from us (Global Connect Consultancy).

So, Amelkis XBRL is a web-based Software as a Service solution, which means that you and your team can log into the application wherever and whenever you want to, as long as you have a stable internet connection. So let’s say you’re ready to start with your XBRL documentation. First thing first, you of course start with importing your documents into Amelkis XBRL. You can do so with Word documents, PDF and Excel documents, and it’s noteworthy to notice when you do so that you will not lose any data quality.

After you’ve imported your documents you can then implement your taxonomy. As I mentioned earlier, you can either implement the ESEF taxonomy or you can create your own taxonomy, otherwise called taxonomy extensions. If you need any assistance with taxonomy and linking data to the taxonomies, please let us know so that we can assist you.

After you’ve implemented your taxonomy you can then start tagging your documents. With Amelkis XBRL you can do this effortlessly.

After you’ve implemented your taxonomy and tagged your documents, you can then validate your documentation. It’s noteworthy to know that when dealing with XBRL reporting, not a single mistake is allowed. So therefore it’s crucial to have software that really assists you with this process, because it will save you a lot of time and stress, and it will assist you with your compliance. So as you can see here, Amelkis XBRL will then flawlessly point out where there are some inconsistencies or if everything is in order. And if there are any inconsistencies, instead of you having to look for it, it will immediately show you.

And after your documentation is in order and is completely validated, you can then start thinking about publishing your documents. Of course you have to publish documents to the authorities, which is your annual report including the XBRL ZIP files, but you can also generate iXBRL documents and publish the contents on your website. This is very interesting for your company since then people, such as analysts and investors or website visitors, can then see your documentation and can see how transparent you are and where your data is actually coming from, which is very favorable for your brand image.

So, I’ve now explained what you can do with Amelkis XBRL, so you might wonder: What role does Global Connect Consultancy play with this? Well, we are the service part of the software, and we strive to make sure that our customers can work on the ESEF reporting either independently or together with us. So we provide three journeys for our customers to choose from, and the first journey is the independent journey. This is for companies that wish to work independently on their ESEF reporting. If they select this journey, well, then we provide the Amelkis XBRL software solution and then train you and your team within a day. Afterwards, if you have any general questions we will gladly assist you. The second journey is the team journey. This is for companies that wish to also work independently on their XBRL projects, but also would like assistance from XBRL experts. We then provide the Amelkis XBRL software application to you and adjust the software to the needs of your company, so it fills in the missing gaps. The software training and customer support is also more extensive. So for example, we train you and your team, which can also be within a day, but if you require more detailed workshops regarding taxonomy or tagging, or you have a lack of resources for a short period and you would like someone to help out with certain processes, then we will gladly do so for you. The third journey is the outsource journey. This is for companies that wish for professionals to take over their XBRL projects. You can then choose to outsource your XBRL projects to us. We also provide extra service for all journeys, which is the last minute XBRL tagging. As i mentioned earlier, sometimes deadlines are coming too close. So in case you feel that it will be too challenging to commit to compliance, and it will be a lot of sleepless nights and a lot of stress, then you should not worry too much, because then we are here for you to help you out. You can contact us either days or weeks beforehand, and we ensure that within a few (4) hours we can assist you with your XBRL tagging.

We have now arrived at the end of this webinar. I would like to share some key takeaways for you. First, XBRL does take time to flawlessly implement, but has huge payoff for companies that want the best possible results and prosperity. XBRL forces you to be on top of your data. It will take time to flawlessly implement for the first time, but then again this is for anything that is new for your company. After everything is implemented you can then flawlessly see what inconsistencies are and what you should do next, so that you can make the best strategic decisions. Secondly, with Amelkis XBRL, you increase transparency, which is necessary for your financial reporting. You have to commit to the rules and legislations regarding transparency reporting, especially if you want prosperity in the future. And lastly, XBRL is a uniform format for the accessibility of business information. In this current day and age, it’s no secret that people want information as quickly as possible, wherever they want to whenever they want to. And if you can provide this information for your interesting parties, such as the investors and analysts, but also for your customers, then this will only strengthen your brand image. People will trust you more so there are a lot of benefits when it comes to making sure that you are transparent, that you of course are trustworthy, and that people can understand where your data is coming from.

So we can say that XBRL can really enhance your financial reporting. Thank you so much for joining us today. I hope I gave you some new insights. If you would like more information regarding XBRL, but also regarding consolidation, IFRS lease and intercompany, please do not hesitate to reach out to us. If you are nearby Amsterdam, you can visit our office. During business hours, you can always give us a call, and otherwise you can send us an email or visit our website. Thank you so much for being here today, and I hope you’re having a lovely day.

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