The (in)correctness of financial reports in the ESEF format of selected Polish listed companies

Abstract

Purpose: The purpose of this article is to determine whether Polish stock exchange issuers have correctly fulfilled the obligation to use XBRL tags in consolidated financial statements prepared in accordance with the new European Union requirement, i.e. in the European Single Electronic Format (ESEF). Methodology/approach: The research method used was a detailed analysis of XBRL tags used by ten randomly selected entities listed on the Warsaw Stock Exchange in their first annual reports prepared in the ESEF format. Findings: Issuers preparing financial statements using XBRL labels made various substantive errors in their selection, in particular, by using an inappropriate tag or creating an un-necessary extension. All identified errors violated the tagging rules contained in EC Dele-gated Regulation 2019/815 (ESEF Regulation). Based on the results, a classification (taxon-omy) of substantive errors that may occur in financial statements tagged with XBRL tags from the ESMA ESEF taxonomy is proposed. Practical implications: the article may be useful both for issuers preparing financial statements using XBRL tags and for statutory auditors who are required to verify the correctness of the tags used as part of their audit obligation. Research limitations: A relatively small research group (10 companies) was used. Originality/value: This article is the first Polish-language study on errors in XBRL tags, which results from the novelty of the subject matter. In addition, due to significant differences in regulations regarding the use of XBRL between the EU and other jurisdictions (espe-cially the US), some errors identified during the study have not yet been described in the literature; hence their proposed categorization may be a significant contribution to the literature.