How Can You Obtain Assurance
Around Financial Information
Posted on a Website?
Slidecast brought to you by:
Michelle Ye
Te...
eXtensible Business Reporting Language
Benefits
• Allows users to prepare, publish, and exchange financial
information ove...
eXtensible Assurance Reporting Language
Objectives
• Enables assurance to be provided on XBRL documents
• Reduces users’ c...
eXtensible Assurance Reporting Language
Uses
• Tests the assertion of whether financial statements
conform with GAAP
• Ass...
Continuous Auditing
Uses
• Improves the integrity of web-based financial information
• Decreases the information asymmetry...
Continuous Auditing – ECAM
Functions of ECAM
• Detects system control configurations through an online
control testing met...
Assurance on XBRL Filing – Viewpoints
Public Company Accounting Oversight Board (PCAOB)
• Issued guidance on assurance eng...
Assurance on XBRL Filing – Viewpoints
International Federation of Accountants (IFAC)
• Aims to develop a common set of sta...
Assurance on XBRL Filing – Viewpoints
American Institute of CPAs
• Developed a set of principles and criteria for the
eval...
Impact on the Accounting Profession
Opportunities
• Assurance on website content represents new business
opportunities for...
Impact on the Accounting Profession
Roles for External Auditors in XBRL Filings
• Less than a quarter of XBRL filers emplo...
Impact on the Financial Statement Users
• Unaudited financial information posted on websites creates
an expectations gap b...
Impact on Executives
Requirements from Accounting Bodies
• Many accounting bodies including the IFAC ascribe the
reporting...
Impact on Executives
Quality Control and Impact on Company Reputation
• Pressure to meet quality threshold because filing ...
Current Issues
Auditor Involvement with Information outside Audited
Financial Statements
• PCAOB is considering changes to...
Current Issues
Cost Concern in Relation to Demand for External Audit
Services
• Cost-benefit trade-off
• Assurance service...
THANK YOU!
For additional inquiry, contact michelle.sy.ye@gmail.com
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How Can You Obtain Assurance around Financial Information Posted on a Website?

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In this slidecast, Michelle will discuss how assurance can be obtained around financial information posted on a website. The frameworks of XARL and continuous auditing will be examined for their use in providing assurance to web-released contents. Then, she will briefly go over several accounting bodies’ viewpoints on assurance on XBRL filings and discuss how this topic impacts executives, financial statement users, and the accounting profession. She closes out with a discussion of some of the issues dominating this topic.

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  • Boritz, J.E., & No, Won G. (2004). Assurance Reporting for XML-Based Information Services. P. 208-211.
  • Boritz, J.E., & No, Won G. (2004). Assurance Reporting for XML-Based Information Services. P. 207-215.
  • Boritz, J.E., & No, Won G. (2004). Assurance Reporting for XML-Based Information Services. P. 213.
  • Chou, Chi-Chun, & Chang, C. Janie. (2010). Continuous auditing for web-released financial information. P. 10.
  • Chou, Chi-Chun, & Chang, C. Janie. (2010). Continuous auditing for web-released financial information. P. 10-12.
  • Public Company Accounting Oversight Board. (2005). Attest Engagements Regarding XBRL Financial Information Furnished Under the XBRL Voluntary Financial Reporting Program on the EDGAR System. Retrieved from http://pcaobus.org/Standards/QandA/05-25-2005.pdf (accessed 1 Jul. 2013).
  • Cunningham, Colleen. (2010). What Companies Shuold Know About XBRL Tagging. P. 27.
  • Alles, Michael G., & Gray, Glen L. (2012). A Relative Cost Framework of Demand for External Assurance of XBRL Filings. P. 115.
  • Fisher, Richard, Oyelere, Peter, & Laswad, Fawzi. (2004). Corporate reporting on the Internet. P. 416-418.
  • Alles, Michael G., & Gray, Glen L. (2012). A Relative Cost Framework of Demand for External Assurance of XBRL Filings. P. 103-108.Boritz, J.Efrim., & No, Won Gyun. (2009). Assurance on XBRL-Related Documents. P. 53.
  • Bedard, Jean C., Sutton, Steve G., Arnold, Vicky, Phillips, Jillian R. (2012). Another Piece of the “Expectations Gap”. P. A17.
  • Fisher, Richard, Oyelere, Peter, & Laswad, Fawzi. (2004). Corporate reporting on the Internet. P. 422-424.
  • Alles, Michael G., & Gray, Glen L. (2012). A Relative Cost Framework of Demand for External Assurance of XBRL Filings. P. 104-105.Windes & McClaughry Accountancy Corporation. (2013). XBRL Consulting & Assurance. Retrieved from http://windes.com/services.html?page=xbrl (accessed 1 Jul. 2013).
  • Bedard, Jean C., Sutton, Steve G., Arnold, Vicky, Phillips, Jillian R. (2012). Another Piece of the “Expectations Gap”. P. A18-A28.
  • Alles, Michael G., & Gray, Glen L. (2012). A Relative Cost Framework of Demand for External Assurance of XBRL Filings. P. 115-125.
  • How Can You Obtain Assurance around Financial Information Posted on a Website?

    1. 1. How Can You Obtain Assurance Around Financial Information Posted on a Website? Slidecast brought to you by: Michelle Ye TechTalk
    2. 2. eXtensible Business Reporting Language Benefits • Allows users to prepare, publish, and exchange financial information over the Internet • Simplifies the process of extracting and analyzing financial data Limitations • Vulnerable to interception and manipulation • Unable to communicate the reliability of financial statements and system controls 2
    3. 3. eXtensible Assurance Reporting Language Objectives • Enables assurance to be provided on XBRL documents • Reduces users’ concern over the creditability of XBRL documents XARL Taxonomy • Contains elements including assurance type, assurance date, auditor’s digital signature, and system reliability • Describes how assurance data within the template are interrelated • Allows consistency to be achieved in all XARL documents 3
    4. 4. eXtensible Assurance Reporting Language Uses • Tests the assertion of whether financial statements conform with GAAP • Asserts the financial information contained in XBRL documents • Provides assurance on the specific taxonomy used to generate XBRL content Levels of Assurance • Information-level: conveys integrity at the financial statements level • Document-level: asserts the integrity in XBRL documents 4
    5. 5. Continuous Auditing Uses • Improves the integrity of web-based financial information • Decreases the information asymmetry between a company and its stakeholders Conceptual Framework • Involves a set of event-driven components, called the external continuous audit machine (ECAM) 5
    6. 6. Continuous Auditing – ECAM Functions of ECAM • Detects system control configurations through an online control testing methodology • Uses testing results to determine nature, timing and extent of substantive tests • Performs online substantive testing on a transaction basis • Summarizes testing results and issues audit report 6
    7. 7. Assurance on XBRL Filing – Viewpoints Public Company Accounting Oversight Board (PCAOB) • Issued guidance on assurance engagements regarding XBRL • Emphasizes the comparison of the human readable version of XBRL documents to those filed to the SEC 7
    8. 8. Assurance on XBRL Filing – Viewpoints International Federation of Accountants (IFAC) • Aims to develop a common set of standards for auditing XBRL documents • Step 1: Ensure an appropriate taxonomy is used • Step 2: Ensure source data is reliable and extensions/customizations of the taxonomy are complete and accurate • Step 3: Confirm that existing internal controls can ensure the completeness, accuracy, and timeliness of XBRL documents 8
    9. 9. Assurance on XBRL Filing – Viewpoints American Institute of CPAs • Developed a set of principles and criteria for the evaluation of XBRL documents • Four principles: Completeness, mapping, accuracy, and structure of information • 24 specific criteria under each of the principles that preparers, reviewers, and practitioners should follow 9
    10. 10. Impact on the Accounting Profession Opportunities • Assurance on website content represents new business opportunities for auditors Risks • Responsibility around unaudited information • Association with false or incomplete information • Inappropriate omission of the audit report 10
    11. 11. Impact on the Accounting Profession Roles for External Auditors in XBRL Filings • Less than a quarter of XBRL filers employed audit firms in their filing process • External assurance provider is not management’s only source to obtain confidence in XBRL filings • Focus of XBRL assurance procedures will move from translation to the process used in preparing the documents 11
    12. 12. Impact on the Financial Statement Users • Unaudited financial information posted on websites creates an expectations gap between user and auditor • Non-professionals are less likely to correctly identify which 10-K components are audited • Investors in both professional and non-professional groups falsely believe some information is audited when in fact not • Investors heavily rely on auditors to verify the accuracy of information presented by management • Users demand greater assurance on information outside of the financial statements 12
    13. 13. Impact on Executives Requirements from Accounting Bodies • Many accounting bodies including the IFAC ascribe the reporting entity with the responsibility for the integrity, electronic presentation, and maintenance of financial information • IFAC recommends companies to publish a detailed policy regarding its use of Internet financial reporting 13
    14. 14. Impact on Executives Quality Control and Impact on Company Reputation • Pressure to meet quality threshold because filing errors get reported on online analysis websites • Need to obtain a high level of confidence in the accuracy of XBRL filings • Filings that contain material misstatements would incur reputational cost to the company • Risk of creditability loss in the financial statements itself • Demand for external assurance services expected to increase after the two-year “safe harbour” period 14
    15. 15. Current Issues Auditor Involvement with Information outside Audited Financial Statements • PCAOB is considering changes to the auditor’s report • The initiative will clarify auditor’s involvement with information outside the audited financial statements • Changes would increase users’ understanding of limitations of audit procedures, and help them identify unaudited 10-K components 15
    16. 16. Current Issues Cost Concern in Relation to Demand for External Audit Services • Cost-benefit trade-off • Assurance service will decrease risk of litigation/reputational damage Mandate for Assurance on XBRL Filings • SEC implies that external assurance on XBRL filings may be required • Also emphasizes that evaluation is separate from preparation and submission of filings • Inconsistency in SEC’s position 16
    17. 17. THANK YOU! For additional inquiry, contact michelle.sy.ye@gmail.com TechTalk

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