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
Top-cycle as Model for XBRL Assurance
ComputationalAuditing.com

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
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.
Top-cycle model as Diagram 5
ComputationalAuditing.com

6.
6
Top-cycle model
as Matrix
ComputationalAuditing.com

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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
Phase 1:
Process Mining
ComputationalAuditing.com

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Phase 2: Identify norm in ‘As Is’ 9
A
B
D
C
ComputationalAuditing.com

10.
Phase 2: Resulting in normative top-cycle 10
ComputationalAuditing.com

11.
Revamped Audit Approach: applying 11
XBRL tagged data & operators in all 5 phases
Topcycle-embedded Audit Assertions
XBRL
US GAAP
Taxonomy
ComputationalAuditing.com

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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.
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

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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.
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.
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.
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.
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
Your
questions,
or advisory comments
PhilipElsas@ComputationalAuditing.com
ComputationalAuditing.com