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Jan Pasmooij RE RA RO Chair Assurance Working Group XBRL Int. Chair XBRL Netherlands

The impact of electronic business reporting on audit and assurance A new challenge for the audit profession WCOA 2006, Workshop 2.1.1, November 15, 2006. Jan Pasmooij RE RA RO Chair Assurance Working Group XBRL Int. Chair XBRL Netherlands Member International Steering Committee XBRL Int.

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Jan Pasmooij RE RA RO Chair Assurance Working Group XBRL Int. Chair XBRL Netherlands

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  1. The impact of electronic business reporting on audit and assuranceA new challenge for the audit professionWCOA 2006, Workshop 2.1.1, November 15, 2006 Jan Pasmooij RE RA RO Chair Assurance Working Group XBRL Int. Chair XBRL Netherlands Member International Steering Committee XBRL Int. Manager ICT Knowledge Center Koninklijk NIVRA Program Director Postgraduate Curriculum IT-Auditing, Erasmus University, Rotterdam Chair International Innovation Network

  2. Program • The current reporting model • Issues of technology – XBRL • Risk involved • Audit and assurance issues • Scenarios for the use of interactive data • The impact of the future reporting model on the assurance standards • Proposals for assurance framework for electronic business reporting • Call to action

  3. Current reporting model GAAP Shareholders Local US IFRS Analysts Banks  Preparing process Information- systems Financial Statement Chambers of Commerce Governments Manual input Regulators

  4. Reporting based on XBRL XBRL GAAP Taxonomies Extension Taxonomy Shareholders NL US IFRS Analysts Banks XBRL Instance-document Information- systems XBRL preparing process Chambers of Commerce Governments Financial Statements Manual input Regulators

  5. The current reporting model based on XBRL GAAP Taxonomies Local Shareholders US IFRS Analysts Banks XBRL Instance-document Preparing process Information- systems t Chambers Of Commerce Governments Financial Statements Manual input Regulators

  6. Risks involved With data in electronic format we need specific controls for: • Identification • Integrity • Authenticity

  7. Audit and assurance issues • The current auditing standards are providing no guidance how to provide assurance on information in electronic format • Current audit opinion is focusing on document level (fair view) • Instance document is a dataset, presentation via a style sheet, so no fair view?? • So we need assurance on data-level?? • We have no taxonomy for the audit opinion or guidance how to connect the opinion to an instance document, could be the FS • No requirements yet for integrity and authenticity of instances documents • No guidance yet about signing audit opinions and validations of the signature

  8. In paper format Identifying data (Entity) Data Classification / Grouping Disclosures Layout / Presentation Page numbers Graphics -- In XBRL format Identifying data (Entity) Data Tags Disclosures -- -- -- Taxonomy references ?? Subject matter: Financial Statements

  9. Financial Statements on paper GAAP The current financial audit and opinion is based on the ISA’s 100 – 999 “Audits of Historical Financial Information”. Local US IFRS  Financial Statements Preparing process Information- systems Users The current audit opinion on Financial Statements is based on ISA 700, 701, 705 or 706. The audit opinion states that the financial statements give a “True and fair view or presented fairly, in all material respects, …………..” Manual input

  10. Sc. : Traditional FS converted to XBRL format GAAP Taxonomies New ISA 80x or 30xx. The opinion should states that the data are derived from the Financial Statementsof….. are the same as GAAP NL Local US US IFRS IFRS Preparing process  Information- systems XBRL preparing process XBRL Instance- document Users Manual input  Financial Statements Users

  11. Sc. : FS in XBRL format only A specific ISA 70x for expressing an opinion on “Financial Statements” in XBRL format XBRL Taxonomies NL US IFRS  Information- systems XBRL preparing process Users XBRL Instance- document Manual input

  12. Sc. : FS in XBRL format only with rendered FS A combined audit opinion about the quality of the data and the data presented being derived from a dataset in XBRL format using a specific style sheet, could be the traditional FS. XBRL Taxonomies NL US IFRS  Information- systems XBRL Preparing process Users XBRL Instance- document Rendering process Manual input  Rendered Financial Statements Users

  13. Sc. : Regulatory or Government filing A specific ISA 30xx for an Assurance Engagements to provide a conclusion on data in XBRL format XBRL Taxonomies NL US IFRS  Information- systems XBRL preparing process Users XBRL Instance- document Manual input

  14. Sc. : Assurance on XBRL preparing process A specific ISA 30xx for an Assurance Engagements to provide a conclusion on the XBRL preparing process XBRL Taxonomies NL US IFRS  Information- systems XBRL preparing process Users XBRL Instance- document Manual input

  15. Call to action • Recognition by auditors and users of the issues addressed • Collect user views about assurance • IFAC / IAASB take ownership of the assurance issues • IFAC/IAASB should develop a long term strategy with regard to XBRL beyond the promulgation of immediate standards • AWG and XBRL Int. are gladly willing to help

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