Dear all,
An increasing number of listed firms are using XBRL in the reporting process.Would this complicate the audit approaches and audit implications?
Also, in the auditees' perspectives, what is the costs-benefits of using XBRL? Please share your views, experiences and thoughts, thanks
Background:
Since 2004, the Securities and Exchange Commission (SEC) expects firms to use eXtensible Business Reporting Language (XBRL) to file their reports. This helps tag a firm’s financial information using a computer readable and searchable engine. Investors are demanding assurance on the tagging process but the Public Company Accounting Oversight Board (PCAOB) has yet to issue a guidance on attesting the engagements regarding XBRL financial information furnished under the SEC’s current voluntary filer program, which relies on the auditor agreeing a paper version of the XBRL-related documents to the information in the official EDGAR filing. This approach is deemed adequate for the current paper-oriented reporting paradigm but once the filing in XBRL becomes mandatory, this will affect the way financial and non-financial data are reported, used and attested. The current audit focus on reconciling only the XBRL output with the paper submissions may not completely address this paradigm shift and may add costs to the rising audit costs and delays of issuing audit opinions.
Hi Chong,
I would suggest you to read the followin article "Are Auditors Interested in XBRL? A Qualitative Survey of Big Auditing Firms in Italy", written by me and Dr. Carlo Caserio. You can find it on the book "Accounting Information Systems for Decision Making", edited by Daniela Mancini, Eddy H.J. Vaassen and Renata Paola Dameru, Springer, 2013. Here follows the abstract of the article. I think it may answer to some of your questions. Kindest regard, Fabio La Rosa
Although academics and scholars have called attention to the opportunities and challenges of eXtensive Business Reporting Language (XBRL), new empirical evidence undermines academic assumptions about XBRL’s easy acceptance and widespread use by auditing professionals working in the field. This study examines whether independent auditors in Italy are really convinced about the utility and practicality of XBRL in their work. What is proposed here is a preliminary theoretical framework for surveying auditors’ interest in XBRL. Electronic questionnaires and semi-structured interviews were used to survey Italian auditors’ interest and test the proposed framework. Data analysis was structured by adopting a multiple case approach. Despite the mandatory requirement for Italian unlisted companies to report financial statements in XBRL, the independent auditors’ knowledge about XBRL remains quite low. As a result of the survey, a set of unexpected but clear-cut attitudes emerged to explain auditors’ limited interest in XBRL.
I agree that auditors may exhibit lack of interest in XBRL probably because many of them may not yet understand it's importance. Never the less I believe there should be no cause for alarm about attestation especially as no publicly quoted company is expected to release any financial information to the public when such financial has not been attested to by any auditor. XBRL is about making financial information about a company available on the internet
Dear all, thanks for sharing the links and resources. Please share your thoughts on the issue about cost benefits of XBRL to the auditors and auditees, thanks
I fail to see how the move to XBRL affects the auditors at all. Investors are demanding more and better information that is user-friendly. That's what XBRL does best. Companies that believe in greater transparency will embrace XBRL to expand and enhance their financial information. Those companies will, I believe, eventually enjoy lower costs of capital than their peers who remain in a narrow, it's-our-information/not-the-shareholders' rut. But, unless I'm missing something, XBRL's effect on auditors is somewhere near slim and none. And 'Slim' just left town!
Warren, thanks for a quick feedback. Others please join in the discussions.
Gin
Dear all,
If you or your professional contacts are using XBRL for audit/assurance purposes, please share the cost-benefits, thanks
Gin
Using XBRL reduces costs, increases financial reporting transparency, reduces preparation time, and reduces fraud and manipulation of accounts
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