The financial report’s genesis
In 17th century France, businesses reported publicly through an annual balance sheet, a measure of assets and liabilities, aiming to prevent bankcruptcy. They were less advanced and standardized than today. Their main goal was to comply with government regulations and ensure the financial stability of businesses and the country. Over the following centuries, accounting continued to evolve, but the publication of accounts remained focused on bankruptcy prevention.
It was during the 20th century that accounting went through major changes. It has become more complex and began to include more sophisticated accounting standards and regulations. The methods have evolved and now include financial management aspects. The International IFRS standards are one of those evolutions. Their application in Europe has been clarified by Regulation (EC) No. 1606/2002, known as the “IAS regulation”, for international accounting standards, published on July 19, 2002.
The implementation of these new standards marked a major turning point in the history of financial reporting, aiming to harmonize the quality of financial reporting on a global scale. This initiative has greatly simplified the comparison of financial statements of companies operating in various countries, thereby increasing transparency and understanding of financial performance.
After the introduction of the IFRS international accounting standards, the URD completed this major change in financial transparency. The IFRS established a common framework for the preparation of financial statements, while the URD streamlined disclosure procedures, allowing companies to publish a single IFRS-compliant document for all European markets where they are listed. This synergy between IFRS and URD has significantly simplified financial information disclosure, thereby improving investors’ access to essential data and strengthening confidence in the European Union’s financial markets.
URD’s Main characteristics
The URD is therefore designed to enable companies to publish a single document that meets the information disclosure requirements for all European markets where they are listed. Among its main characteristics, here are the most important:
Uniformity and Coherence: Ensures that essential information is consistently shown.
Easy Access to Information
Simplification of the Disclosure Process: Significantly simplifies the financial information disclosure process for listed companies.
Cost Reduction and Time Saving: Businesses can reduce compliance costs while speeding up the reporting process.
Compliance with IFRS and XBRL: the compliance with international accounting standards (IFRS) and the use of XBRL language for financial reporting ensures alignment with global accounting best practices and facilitates the analysis and processing of financial data.
A new standard since 2021: the ESEF format (European Single Electronic Format)
One of the most significant developments in the URD was the adoption of the ESEF standard. This regulation was implemented in 2020, and requires companies to provide their financial reports in electronic format compliant with the ESEF standard.
The fundamental objective of the ESEF (European Single Electronic Format) regulation is to improve the comparability and transparency of financial reporting at European level (with the upcoming arrival of the ESAP – European Single Access Point). To achieve this, the European Union has implemented a strategy to standardize the required file standards.
From 2022, universal registration documents are required to adopt the iXBRL format, which consists of a single HTML version enriched with XBRL tags. Gradually, the level of tagging and the scope of the data concerned will increase.
Evolution of the URD
Another important development of the URD: the progressive integration of the CSR (Corporate Social and Environmental Responsibility) Report. This initiative began in 2019 with the obligation for listed companies to disclose non-financial information on their sustainable development performance.
Arrival of the CSRD
More recently, with the appearance of the CSRD (Corporate Sustainability Reporting Directive), the European Union has strengthened its commitment to transparency and corporate social and environmental responsibility. The CSRD aims to extend these reporting obligations to a greater number of companies, which reflects the growing importance given to the impact of companies in the economic and regulatory landscape.
Conclusion
To conclude, the URD is a major step forward in the transparent publications of financial information in Europe. It simplifies business life, facilitates investors’ access to essential financial data and encourages compliance with international accounting standards. The URD is constantly evolving to remain at the cutting edge of technological and regulatory advances, thus promoting a better understanding of the financial performance of European companies.
