Background on Developments Related to XBRL

1
Background on Developments Related to XBRL
Assurance

• Amy Pawlicki
• Director Business Reporting, Assurance
  Advisory Services and XBRL
• AICPA

2
Agenda

• How will XBRL impact the financial reporting
  process as we know it?
• Common Errors
• Auditor Implications
• AICPA XBRL Assurance Task Force work in progress
• Questions Discussion

3
How will XBRL impact the financial reporting
process?

• Fundamental issues
• XBRL tagging is very different from turning a
  Word document into a pdf
• Tagging data is the equivalent of classifying
  data in company financial statements and
  footnotes
• Currently, tagging is supplementary to the
  traditional financial reporting process, and the
  accuracy of tagging is not covered by the
  traditional auditors report...

4
How will XBRL impact the financial reporting
process?

• Example Illustration of potential tagging risks
• Source balance sheet element
• Accounts Receivable, net of allowance for
  doubtful accounts
• Definition Trade receivables, net of allowance
  for doubtful accounts
• Tag chosen from the appropriate standard
  taxonomy
• Receivables, Net, Current
• Definition The total amount due to the entity
  within one year of the balance sheet date (or one
  operating cycle, if longer) from outside sources,
  including trade accounts receivable, notes and
  loans receivable, as well as any other types of
  receivables, net of allowances established for
  the purpose of reducing such receivables to an
  amount that approximates their net realizable
  value.

5
Research discovers errors in VFP

• Missing elements and amounts
• Incorrect amounts
• Sign flips
• Duplication of items
• Incorrect tagging
• Research conducted by NC State University, which
• examined 22 company XBRL submissions under the
• VFP and compared them to the related 10K filings

6
Common errors found in initial SEC Interactive
Data filings

• Extensions made when elements already exist in
  standard list of tags
• Text block elements too broad
• Labels do not include the same text as html
  document (including information in parenthesis)
• Extensions for monetary items require assignment
  of debit/credit or definition, companies are not
  including
• New elements created with company-specific
  information in the element name
• Presented at SEC Public Seminar June 10, 2009

7
Auditor Implications

• The XBRL data that will be used by investors,
  regulators and others is not necessarily the same
  as the underlying, audited data
• In the US, SEC Rules do not require any auditor
  involvement regarding the submission of XBRL
  data, however issuers may voluntarily seek
  auditor involvement as they deem appropriate

8
AICPA XBRL Assurance Task Force work in progress

• Center for Audit Quality Alert on Potential Audit
  Firm Service Implications Raised by the SEC Final
  Rule on XBRL
• Statement of Position on Performing Agreed-Upon
  Procedures Engagements
• Consideration of issues related to evolution of
  examination guidance post-VFP

9
CAQ Alert on Potential Audit Firm Implications of
SEC Rule on XBRL

• Potential services audit firms may be asked to
  provide
• Advisory services
• Assurance services
• Agreed-upon procedures
• Examination of an assertion about XBRL-tagged
  data
• Examination of controls over the preparation of
  XBRL-tagged data
• AT 601, Compliance Attestation
• Review of an assertion about XBRL-tagged data
• Other considerations related to XBRL-tagged data
• Effect of submission of XBRL-tagged data on the
  Independent Auditors Report
• Reference to other forms of reports

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Statement of Position on Agreed-Upon Procedures
Engagements

• Company accepts responsibility for the subject
  matter and the assertion
• Sufficiency of procedures is determined by the
  company to meet its own needs
• Report is restricted use not distributed beyond
  the company nor included or referred to in an SEC
  filing
• Report is a detailed description of procedures
  and findings only
• Time for engagement execution is relatively brief
• Cost may be managed based on defined scope

11
Consideration of issues related to evolution of
examination guidance

• Subject matter vs. management assertions
• Subject matter vs. criteria
• Materiality
• Scope
• Etc.

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Questions and Discussion