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Accounting Professionals' Guide to XBRL Assurance Services
- 1. Considerations for Accounting Professionals Wishing to Perform XBRL-Specific Assurance Services Hang Miao
- 2. Brief introduction to XBRL eXtensible Business Reporting Language Computing language designed to improve quality of financial reporting by: Eliminating manual keying Making financial statements between companies more comparable
- 3. Brief introduction to XBRL (Cont’d) Example: Consider the following piece of financial information: Assets held For Sale € 100,000 In XBRL, this information would be represented as: <ifrs-gp: AssetsHeldSaleontextRef=”Current_AsOf” unitRef=”U-Euros” decimals=”0”> 100000 </ifrs-gp:AssetsHeldSale> Source: http://www.xbrl.org/Example1/
- 4. Brief introduction to XBRL (Cont’d) XBRL financial statements are created by tagging financial statement data with elements from an XBRL taxonomy An XBRL taxonomy is a dictionary of the XBRL tags. <ifrs-gp: AssetsHeldSalecontextRef=”Current_AsOf” unitRef=”U-Euros” decimals=”0”>100000</ifrs-gp:AssetsHeldSale>
- 5. Financial statements XBRL document (Instance) Users XBRL taxonomy
- 7. What services can an accountant provide with respect to XBRL? XBRL was not designed with information integrity in mind Possible problems with XBRL include: Improper use of taxonomic elements Improper use of custom elements XBRL document does not match original financial statements
- 8. Can professional accountants provide XBRL services? Assurance is currently not required for XBRL documents As with any other assurance engagement, the accountant must be independent See AICPA SOP 09-1 for list of engagement conditions
- 9. Choosing between an Attestation Report and Specified Procedures Report Two types of reports can be issued: Attestation Report (US: AT 101, Can: HB 5025) Specified Procedures Report (US: AT 201, Can: HB 5025) Choice depends on user needs Specified procedures report requires input from users
- 10. Skills/expertise required Knowledge of regulatory environment (e.g. SEC filing rules in the US) Knowledge of IT and XBRL Ability to use XBRL reading and manipulation programs
- 11. Future developments More guidance– AICPA Exposure Draft Increased size and complexity of XBRL filings Increased user sophistication with respect to XBRL
- 12. Thank you for watching
Editor's Notes
- For example, let’s say that I wanted to represent “Assets held for sale” of 100,000 Euros in XBRL.In XBRL, the code looks like something on the screen that you see. If you’ve ever worked with HTML, this would be instantly familiar to you, because like HTML, XBRL is also a Markup Language in which information is tagged with data that describe that information.
- In the example, AssetsHeldForSale was an element. A taxonomy is a collection of these elements. A financial statement preparer would map each account with the corresponding element. This creates a mapped XBRL document, also known as an XBRL instance.
- Can professional accountants provide XBRL services?In canada and the US, there is currently no requirement to provide XBRL assurance services. In other words, XBRL filings are unaudited, in the same way as the MD&A.As with any other assurance engagement, the accountant must be independent. What does this mean in an XBRL context? Well, if you were performing advisory with regards to XBRL, you may pass off as independent. However, if you actually perform tagging for the client, then your indepndence is impaired, as you will end up reviewing your own work.There are more conditions, but if you are interested in the full list, please see the AICPA’s SOP 09-1
- There are two types of reports that an auditor can issueOne is the Attestation Report (US: AT 101, Can: HB 5025)The other is a Specified Procedures Report (US: AT 201, Can: HB 5025)With the attestation report, the accountant issues an opinion regarding the accuracy of the XBRL information, and whether it is materially misstated.With a Specified Procedures Report, the accountant simply performs a list of procedures and reports on the outcome. No opinion is actually issued.The choice of report depends on user needs. An attestation report is more standardized, and therefore more suitable when you don’t know who the users will be. With the Specified Procedures Report, the user actually determines what assertions need to be tested and what materiality is. Therefore, the users have to be identifiable for this type of engagement to be performed. An example of such a user would be a company’s Board of Directors.You also need to keep in mind that because Attestation reports require the issuance of an opinion, there is greater legal risk for the accountant.
- There are several things that a CA needs to know beyond the core body of knowledge that practicing Cas are required to know.Knowledge of regulatory environment (e.g. SEC filing rules in the US) Canadian Securities Administratiors (CSA)Knowledge of IT and XBRL – how XBRL works, what sort of taxonomies are required.etcAbility to use XBRL reading and manipulation programs. Some procedures can be done manually but as XBRL filings get more complex in the future, the only way to economically provide XBRL services is by using these software. Thankfully, most of them are free.
- In June of this month, the AICPA has issued an exposure draft on XBRL assurance. This is the first attempt by an accounting body to issue authoritative guidance. The exposure draft talks about XBRL assurance at a high, principles-based level, so it should help accountants with XBRL assurance services by providing more guidelines.Also, XBRL filings are mandatory now, and they are expected to become longer and more complex, as preparers get better at making them.Finally, users will become more sophisticated at using XBRL filings, so it is possible that one day, assurance on XBRL filings will become a regulatory requirement.