XBRL News: ESEF, sustainability standards and business models

https://dailyfintech.com/2020/11/19/xbrl-news-esef-sustainability-standards-and-business-models/
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Here is our pick of the 3 most important XBRL news stories this week. 

1 ESEF audit

The introduction of the new European Single Electronic Format (ESEF) includes a set of requirements around assurance of digital disclosures – but how will “ESEF audit” actually work? The European Commission (EC) has now published a long-expected explanatory note clarifying aspects of the rules, laws, and procedures associated with the preparation, audit, and publication of ESEF compliant annual financial reports.

The explanatory note provides a long-expected clarification of what should be obvious in the first place: the ESEF instance needs to match the legacy formats.

2 IFRS Foundation aims for coherence, not complexity

In my view, the IFRS Foundation’s Consultation Paper on Sustainability Reporting is the most significant development in accounting standard-setting since the creation of the International Accounting Standards Board (IASB) in 2001. This is big—and, therefore, crucial to get right.

The CEO of the SASB Foundation weighs in on the IFRS Foundation’s consultation about whether – apologies for the metaphorical cocktail – the 800 pound gorilla should throw its hat in the ring when it comes to its core business. I for one believe that in an upcoming body of Sustainability Standards, some wheels will have to be reinvented. This is because a standard that is to be audited and – in all likelihood – mandatory needs drafting that is quite different from a standard that is voluntary by nature.

3 Workiva announces Q3 2020 financial results

Workiva Inc. (NYSE:WK), the company that simplifies complex work, today announced financial results for its third quarter ended September 30, 2020. “We are pleased with our financial results, which beat guidance for revenue and operating income,” said Marty Vanderploeg, Chief Executive Officer. “We executed on our initiatives, resulting in record bookings in the third quarter.” “Both transaction volume and average deal size exceeded our expectations in the third quarter,” said Stuart Miller, Chief Financial Officer. “As a result, we are raising guidance for the fourth quarter.”

We missed this last week, but it’s still noteworthy that Workiva was able to beat both internal guidance as well as market expectations (WK trades 25% above the level before publication) in this environment, and keeps raising guidance for Q4. Their cloud-based subscription model hits a sweet spot in this pandemic economy, although their speed of growth may be constrained by their focus on use cases. The converse seems to be true for SAP: the market hasn’t taken kindly to the accelerated conversion from the traditional, short-term more profitable licenses model to a subscription model. It’s still the right thing to do, though. (Note that the author has a commercial interest in both companies). 

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Christian Dreyer CFA is well known in Swiss Fintech circles as an expert in XBRL and financial reporting for investors.

 We have a self-imposed constraint of 3 news stories each week because we serve busy senior leaders in Fintech who need just enough information to get on with their job.

 For context on XBRL please read this introduction to our XBRL Week in 2016 and read articles tagged XBRL in our archives. 

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https://dailyfintech.com/2020/11/19/xbrl-news-esef-sustainability-standards-and-business-models/