All preparers of Inline XBRL (iXBRL) reports complying with the requirements as per the European Securities and Markets Authority’s (ESMA) European Single Electronic Format (ESEF) regulation, are seeking to better understand when and how to anchor entity-specific elements to ESEF taxonomy elements.

Introduction to extension and anchoring

The ESEF mandate permits the issuer to submit their Annual Financial Report in iXBRL format by assigning appropriate concepts from the ESEF taxonomy. Since, ESEF taxonomy is open taxonomy, where if the issuer does not find an appropriate tag in the base taxonomy then they are able to create a company-specific tag which is called an “Extension”. There comes the role of anchoring which creates a link between extension and base taxonomy element, as per ESEF rules.

What is Anchoring?

Anchoring helps to define the relationships between extended elements created by preparers, and the base taxonomy elements. When preparers are required to create extension elements in their consolidated financial statements, where an appropriate element is not available in the base taxonomy. 

As per ESEF rules, anchoring links an extension element created by the preparer, to an appropriate element in the ESEF taxonomy that is either “Wider” or “Narrower” in accounting meaning or scope. 

ESMA is the first regulator that introduced anchoring.

Phases of anchoring implementation

In the initial stage of implementation of ESEF, the filers have already used anchoring in their 2021 filings for extension elements appearing in the primary consolidated financial statements. 

As mentioned in the ESEF reporting manual, the RTS on ESEF does not set an anchoring requirement for the Notes to the financial statements. Therefore, if preparers decide on a voluntary basis to create detailed tag extension elements to mark up their Notes, there is no obligation to anchor such extension elements.

Anchoring examples

1. Anchoring through wider accounting meaning or scope

In this case, every custom element must be anchored to the ESEF taxonomy concept which has a wider or broader accounting meaning. The wider accounting meaning or scope will be an ESEF taxonomy element with a related meaning that fully includes the meaning of the extension element.

Example 1: One-to-one anchoring of concepts

Below scenario where the following concept is included in the Statement of financial position.

Solution: 

ESEF taxonomy does not have a concept of “Other current payables”. Hence, an extension concept must be used. For “Other current payables”, the closest wider accounting meaning concept is “Current liabilities” available in the ESEF taxonomy. Therefore, the extension concept for “Other current payables” should be anchored to the closest wider accounting meaning concept identified below.

Example 2 : Disaggregations

Line items included for disclosures in the Statement of Comprehensive Income:

Solution: 

In this example, for both line items, there are no specific base taxonomy concepts available in the ESEF taxonomy. Hence, in such a scenario, the extension concepts need to be used. For these extensions, the closest broader accounting meaning concept i.e “Revenue” available in the ESEF taxonomy. Therefore, both extension concepts must be anchored to a wider ESEF taxonomy concept i.e “Revenue”, identified below.

Example 3: Disaggregation with subtotal

Line items in the Statements of Comprehensive Income

Solution:

In this example, all line items are extension concepts. Individual extension concepts must be anchored to a wider concept ie. “Revenue”, identified below. The “Software and Service Revenue” is subtotal to the other two extension concepts. Note that a subtotal concept does not require anchoring to the ESEF taxonomy concept. In such a case, the presentation trees and calculation trees help to identify which part of the financial statements they relate to and document any arithmetic relationships which can be documented.

2. Anchoring through narrower accounting meaning or scope

An extension may also be anchored to the ESEF taxonomy concepts through the closest narrower accounting meaning or scope. This is the case where disclosure line-items are reported as a combination or summation item.

Example 4: Combined concepts

The below-combined concept is appearing the Statement of Financial Position:

Solution: 

Here, line-item “Share capital and share premium” does not have an appropriate ESEF taxonomy element; whereas two different separate concepts ie. “Issued capital” and “Share premium” are available in the ESEF taxonomy. So, these two different concepts can be applied as narrower concepts to the extension concept, identified below.

Conclusion:

As per the ESEF reporting manual, the extension of consolidated financial statements must be anchored to the base taxonomy element by applying wider or narrower accounting meaning. In the case of the subtotal extension concept, anchoring is not required, because its contributor concepts are presented in a Calculation. Also, if one of the narrower concepts is insignificant or irrelevant, it is not necessary to anchor it.