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Kansas Elsas Klint 2011

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Kansas Elsas Klint 2011

  1. 1. 5th University of Kansas International Conference on XBRL Transparency, Assurance, and Analysis Revamping the Audit Approach using Accounting Equations: Processing XBRL-tagged Data in an XBRL-tagged Top-cycle Philip Elsas, ComputationalAuditing.com Paul Klint, CWI.nl Trevor Stewart, Deloitte & Touche Rajendra Srivastava, University of Kansas Hans Blokdijk, Limperg Institute Miklos Vasarhelyi, Rutgers University Overland Park, Kansas April 28-30, 2011
  2. 2. 2 Top-cycle as Model for XBRL Assurance ComputationalAuditing.com
  3. 3. 3 Why a model for XBRL assurance? • To avoid a too complicated and too flexible language • Model-based closure around XBRL assurance language • Top-cycle auditing model guides design of Domain-Specific Language (DSL) for XBRL assurance • Tagging framework for both data and operators • Model-driven auditing for real-time trust ComputationalAuditing.com
  4. 4. 4 Wholesale Trading Enterprise, Elementary Top-cycle Model AccRec: AccRec[B] + SP * Sales – AccRec[E] → CashRcpt Inv: Inv[B] + Pur – Inv[E] → Sales AccPay: AccPay[E] + CashDisb – AccPay[B] → PP * Pur Cash: Cash[B] + ColVAT + CashRcpt – PayVAT – Cash[E] → CashDisb VAT: VAT[E] + VPP * Pur + PayVAT – VSP * Sales – VAT[B] → ColVAT ComputationalAuditing.com
  5. 5. Top-cycle model as Diagram 5 ComputationalAuditing.com
  6. 6. 6 Top-cycle model as Matrix ComputationalAuditing.com
  7. 7. 7 Revamped Audit Approach: 5 phases “Next Generation Auditing: Data-Assurance as a Service” 1. Mining ‘As Is’, actual top-cycle process model 2. Identify ‘To Be’, normative top-cycle 3. Continuous Auditing: continuous confrontation to norm 4. Dempster-Shafer-Srivastava method for aggregation 5. Publish deviation top-10 on interactive dashboard ComputationalAuditing.com
  8. 8. 8 Phase 1: Process Mining ComputationalAuditing.com
  9. 9. Phase 2: Identify norm in ‘As Is’ 9 A B D C ComputationalAuditing.com
  10. 10. Phase 2: Resulting in normative top-cycle 10 ComputationalAuditing.com
  11. 11. Revamped Audit Approach: applying 11 XBRL tagged data & operators in all 5 phases Topcycle-embedded Audit Assertions XBRL US GAAP Taxonomy ComputationalAuditing.com
  12. 12. 12 Design & Development of a Domain-Specific Language for Auditing A software engineer's view: ● DSL captures domain knowledge ● DSL leads to 10-50x increase in software productivity
  13. 13. Domain Knowledge 13 Auditor: 20 words for debt Inuit: 20 words for snow Th. Limperg Anon. Inuit Woman Words capture essential domain knowledge: describe them in feature model/ontology/... and use as basis for DSL design
  14. 14. 14 DSL realization Use meta-programming to Use meta-programming to compile DSL to (Java-based) Design of Design of compile DSL to (Java-based) service implementations service implementations auditing DSL auditing DSL DSL DSL Compiler Compiler Implements (See rascalmpl.org) Software services for Software services for mining/checking/ mining/checking/ visualization/... visualization/...
  15. 15. Scoping our DSL 15 ● XBRL Formula ● Continuity equations ● XBRL ontologies ● Audit planning ● Process mining questionnaires ● Dempster- ● Reporting with Shafer-Srivastava drill down Let's bring the benefits of a DSL Let's bring the benefits of a DSL to the auditing domain and profit from to the auditing domain and profit from the power of meta-programming the power of meta-programming languages like Rascal languages like Rascal
  16. 16. Invitation to team up on R&D projects 16 What’s in it for an audit firm? • Avoid overlapping investments • ROI: ensure connecting R&D and relevant know how What to bring to the table? • Proposal on pilot studies • Client accompanying you in pilots • Time commitment of audit expert Top 3 proposals are rewarded with team-up connecting to your audit practice ComputationalAuditing.com
  17. 17. Golden opportunity for Ernst & Young 17 Extend E&Y CARAT project proposal on audit tools & techniques by inclusion of pilots on owner/franchisor oriented audit approach with E&Y audit clients: • McDonald’s - global franchisor-franchisee • Twinfield - no.1 in online accounting Build on successful project of Twinfield for McDonald’s http://www.vanoers.nl/Home/Diensten/Accountancy/Adviseurvoorfranchisenemers.aspx & include support of subcontractors in pilots: • Chris Nedza - CEO of ZeeZor, real-time relation franchisor-franchisee: revenue completeness • Anne Rozinat - Fluxicon, process mining ComputationalAuditing.com
  18. 18. Current considerations 18 Finalize as white paper for China’s Ministry of Finance, Accounting Regulatory Department - advised by Fou-Khan Tsang, board member of SRA INAA: • China is on the outlook for alternative audit approach • Excellent appreciation of ownership orientation • Top-cycle concept has high yin-yang quality India – current EY CARAT collaboration is springboard Netherlands – establishing platform for internationalizing proven Equational Audit Approach: integrated approach for owner-ordered and management-ordered auditing ComputationalAuditing.com
  19. 19. 19 Your questions, or advisory comments PhilipElsas@ComputationalAuditing.com ComputationalAuditing.com

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