Machine-readable accounts: the UK perspective
12 June 2020: the UK government has clarified the effect the new European Single Electronic Format regime will have on directors’ sign-off of accounts.
From January 2020, the EU has required EU-listed companies to prepare their accounts in keeping with the European Single Electronic Format (ESEF) Regulation.
Much has happened since we reported that the EU’s Transparency Directive now requires annual reports of EU issuers to be prepared in XHTML. The coronavirus pandemic may have caused a temporary shift in our attention but the move to digitise financial information is still on track. The ESEF Regulation applies to consolidated annual accounts prepared in accordance with International Financial Reporting Standards by companies listed on a regulated market and for financial years beginning on or after 1 January 2020.
The Department for Business, Energy and Industrial Strategy (BEIS) has now set out the UK’s position on the effect of the ESEF Regulation on the directors’ sign-off of accounts. In particular, BEIS addresses the question of whether directors must consider the iXBRL tagging when confirming that the accounts meet the requirements of the Companies Act 2006 and give a true and fair view of the company’s financial position.
BEIS says that the electronic formatting requirements in the ESEF Regulation can be applied after sign-off of the annual accounts by the directors. It writes: “In practical terms, this means the directors’ confirmation that the accounts meet the requirements of the Companies Act and give a true and fair view of the company’s financial position, does not extend to consideration of the iXBRL tagging. This is the case even if the company chooses to tag the accounts before submitting them to be signed off by the directors.”
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