UKSEF for 2021 annual reports: Yes? No? Not now?

Project leaders implementing the European single electronic format (ESEF) sometimes ask about a related taxonomy called the UK single electronic format (UKSEF) published by the FRC last September. Questions revolve around whether they should use it for their 2021 annual report, instead of using the taxonomy created for ESEF.

What is UKSEF?

When ESEF was introduced into UK regulation in 2019, it brought with it the potential to be a platform to build upon, enabling more digital information to be made available than the ESEF rules require. The creation of the UKSEF taxonomy has done this, extending ESEF to cover:

• Disclosures prompted by the new Streamlined Energy and Carbon Reporting (SECR) requirement, enabling them to be tagged in the same way as financial statements.
• The company’s registered number and the period end date, to enable an ESEF annual report to pass through the digital gateway at Companies House.

Given everything required by ESEF is included within the UKSEF taxonomy, it’s a viable option for UK listed companies.

Should UKSEF be used?

The compulsory element of the ESEF requirement is to file with the FCA, rather than Companies House. BEIS has indicated that UKSEF can also be used for filing with the FCA. So in short, either option is acceptable.

So what to do?

Given that stakeholders will have access to new digital information through ESEF, it seems reasonable to extend it to cover the SECR disclosures, to help digitally automated analysis of carbon emissions data. Similarly, it is reasonable to aim to file the fullest possible version of the annual report at Companies House.

But it’s equally reasonable to reflect that ESEF will be an annual commitment and that the first year may be challenging enough without adding further burden. So perhaps the UKSEF step-up could be rolled into the additional tagging necessary for second year compliance with ESEF. Alternatively, the step-up could be deferred to when UKSEF becomes mandatory, with no certainty that point will ever arrive.

If each option is acceptable, why are we discussing this?

ESEF was postponed by one year because its implementation presented a significant challenge during the pandemic. That challenge relates to process, solution styles, timetables, judgements, review controls and corporate communication. These are interrelated and seem best planned by teams well in advance of the year end.

In comparison, the decision point on UKSEF seems a relatively straightforward matter and can probably be left until later in the project plan. My hope is that in the months ahead some companies decide that the extra step is worth taking – the SECR data is of considerable interest and the more data that can be filed at Companies House, the better.