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Automatic Rendering Tool and Digital Audit Process Innovation

Automatic Rendering Tool and Digital Audit Process Innovation . Nov 2005 YongMoon Lee KICPA & AICPA. Automatic Rendering Tools. Table of Contents. Digital Audit Process Innovation. XBRL Adoption Plan By Financial Supervisory Service of Korea. Automatic Rendering Tools.

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Automatic Rendering Tool and Digital Audit Process Innovation

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  1. Automatic Rendering Tool and Digital Audit Process Innovation Nov 2005 YongMoon Lee KICPA & AICPA

  2. Automatic Rendering Tools Table of Contents • Digital Audit Process Innovation • XBRL Adoption Plan By Financial Supervisory Service of Korea

  3. Automatic Rendering Tools • Taxonomy and Instance Document Overview • Consideration For XBRL Instance Document • Screen Shot • Benefits expected

  4. Taxonomy Framework For Audit Report Accountants Report (krfr-ar) Primary Terms Elements (krfr-pte) Primary Terms Relationships (krfr-ptr) Commercial & Industrial (kr-gaap-ci) Commany Extension Taxonomy MS Word File Audit Report File Instance Documents

  5. Consideration For XBRL Instance Document

  6. Consideration For XBRL Instance Document Need two versions of XBRL editor

  7. Digital Audit Process innovation XBRL FS Editor • Preparer’s Responsibilty • Auditor’s Responsibilty Auditor’s Opinion Financial Statement of Position Income Statement Statement of Appropriation of Retained Earnings Cash Flow Statement • XBRL Audit Report Notes IBcenter Page 7

  8. XBRL Editor Screen Shot

  9. XBRL Editor with Audit Report Rendering Screen Shot MS-Word FIle

  10. Benefits Expected • Automation of word processing which can import xbrl instance document • It can be used for sending the xbrl document after completion • It can attract CPA’s interest and can save time and money • It can reduce errors in typing and calculation

  11. Digital Audit Process Innovation • Current Process • To Be Model • XBRL GL • Benefits expected • Considerations

  12. Digital Audit Process innovation Current Process Trial Balance, Finacial Statement Manual Input By Auditor Leadsheet, W/P Dart Input (SGML) Audit Program/ Check List Inspection, Sampling, Confirmation, Calculation, Support by Audit tools Adjustment Manual Input T/B After Adjustment F/S With Auditor’s Opinion IBcenter Page 12

  13. Digital Audit Process innovation To Be Process (Web Based) (*)Cretop which is on-line service of credit information can be used for the valuation of Receivable Trial Balance, Finacial Statement XBRL GL Leadsheet, W/P Dart Input (XBRL) Inspection, Sampling, Confirmation, Calculation, Support by Audit tools (*)Cretop Audit Program/ Check List Adjustment Automatic Input T/B After Adjustment F/S With Auditor’s Opinion IBcenter Page 13

  14. Audit Process Automation XBRL GL Chart of Accounts Entries Aging Trial Balance GL Inventory Open AP Open AR Audit Working Paper Calculation Sampling Confirmation Reporting ERP Legacy SYS

  15. XBRL GL Characteristics Flexibility Reporting Independent Consolidation System Independent Complements XBRL for financial reporting

  16. XBRL GL Characteristics - Reporting Independent It collects general ledger and after-the-fact receivables, payables, inventory and other non-financial facts, and then permits the representation of that information using traditional summaries and through flexible links to XBRL for reporting. Source : http://www.wbrl.org/GLTaxonomy/

  17. XBRL GL Characteristics - System Independent Any developer can create import and export routines to convert information to XBRL GL format. This means that accounting software developers need only consider one design for their XML import/export file formats. Application service providers can offer to supply XBRL import and output so end-users can more easily use their own data. Companies developing operational products, such as point of sale systems or job costing, or reporting tools can link with many accounting products without needing specialised links to each one. Source : http://www.wbrl.org/GLTaxonomy/

  18. ERP And Auditing Current Situation IBC PeopleSoft SAP Oracle disparate accounting systems … … … … Audit Audit Audit Audit Separate auditing efforts

  19. XBRL GL and ERP Systems independent IBC PeopleSoft SAP Oracle ERP Vendors … … … … XBRL GL Taxonomy XBRL GL Instance Auditing

  20. XBRL GL Characteristics - Consolidation Popular low-end products and mid-market solutions are not designed to facilitate consolidating data from multiple organisations.  XBRL GL can help transfer the general ledger from one system to another, be used to combine the operations of multiple organisations, or bring data into tools that will do the consolidation. Source : http://www.wbrl.org/GLTaxonomy/

  21. XBRL GL Characteristics - Flexibility XBRL GL provides flexibility, overcoming the limitations of other approaches such as Electronic Data Interchange (EDI). It offers an extensible, flexible, multi-national solution that can exchange the data required by internal finance, accountants, and creditors. Source : http://www.wbrl.org/GLTaxonomy/

  22. XBRL GL Characteristics – Complements XBRL FR It complements XBRL for financial reporting, linking financial reports to the detail behind them, providing all the specific information required for audit workpapers, budget planning, and detailed reporting. Source : http://www.wbrl.org/GLTaxonomy/

  23. XBRL FR and XBRL GL Relationship XBRL Chart Of Accounts <gl-cor:accountMainID> <gl-cor:xbrlElement> XBRL GL Instance Doc XBRL FR Instance Doc <krfr-pte:OperatingRevenue> <gl-cor:accountMainID>

  24. XBRL GL Instance Document - example <gl-cor:entryHeader> <gl-cor:enteredBy contextRef="now">YongMoon Lee</gl-cor:enteredBy> <gl-cor:enteredDate contextRef="now">2005-12-01</gl-cor:enteredDate> <gl-cor:sourceJournalID contextRef="now">Junpyo</gl-cor:sourceJournalID> <gl-cor:entryNumber contextRef="now">10</gl-cor:entryNumber> <gl-cor:entryType contextRef="now">standard</gl-cor:entryType> <gl-cor:entryComment contextRef="now">The comment for this entry</gl-cor:entryComment> <gl-bus:sourceJournalDescription contextRef="now">JE</gl-bus:sourceJournalDescription> <gl-cor:entryDetail> <gl-cor:lineNumber contextRef="now">1</gl-cor:lineNumber> <gl-cor:account> <gl-cor:accountMainID contextRef="now">10100</gl-cor:accountMainID> <gl-cor:accountMainDescription contextRef="now">Rent</gl-cor:accountMainDescription> <gl-cor:accountPurposeCode contextRef="now">koreangaap</gl-cor:accountPurposeCode> <gl-cor:accountType contextRef="now">account</gl-cor:accountType> </gl-cor:account> <gl-cor:debitCreditCode contextRef="now">D</gl-cor:debitCreditCode> <gl-cor:amount contextRef="now" decimals="2" unitRef="usd">50000</gl-cor:amount> <gl-cor:postingDate contextRef="now">2005-11-08</gl-cor:postingDate> <gl-cor:identifierReference> <gl-cor:identifierCode contextRef="now">1141</gl-cor:identifierCode> <gl-cor:identifierDescription contextRef="now">IBCENTER Ltd</gl-cor:identifierDescription> <gl-cor:identifierType contextRef="now">V</gl-cor:identifierType> </gl-cor:identifierReference> <gl-cor:documentType contextRef="now">check</gl-cor:documentType> <gl-cor:postingStatus contextRef="now">posted</gl-cor:postingStatus> </gl-cor:entryDetail> <gl-cor:entryDetail> <gl-cor:lineNumber contextRef="now">2</gl-cor:lineNumber> <gl-cor:account> <gl-cor:accountMainID contextRef="now">10200</gl-cor:accountMainID> <gl-cor:accountMainDescription contextRef="now">Chequing</gl-cor:accountMainDescription> <gl-cor:accountPurposeCode contextRef="now">koreangaap</gl-cor:accountPurposeCode> <gl-cor:accountType contextRef="now">account</gl-cor:accountType> </gl-cor:account> <gl-cor:debitCreditCode contextRef="now">C</gl-cor:debitCreditCode> <gl-cor:amount contextRef="now" decimals="2" unitRef="usd">50000</gl-cor:amount> <gl-cor:postingDate contextRef="now">2005-11-08</gl-cor:postingDate> <gl-cor:identifierReference> <gl-cor:identifierCode contextRef="now">1130</gl-cor:identifierCode> <gl-cor:identifierDescription contextRef="now">IBCENTER Ltd</gl-cor:identifierDescription> <gl-cor:identifierType contextRef="now">V</gl-cor:identifierType> </gl-cor:identifierReference> <gl-cor:documentType contextRef="now">check</gl-cor:documentType> <gl-cor:postingStatus contextRef="now">posted</gl-cor:postingStatus> </gl-cor:entryDetail> </gl-cor:entryHeader>

  25. Chart Of Accounts Instance Document - example <gl-cor:account> <gl-cor:accountMainID nonNumericContext="s1">1111</gl-cor:accountMainID> <gl-cor:accountMainDescription nonNumericContext="s1">Cash </gl-cor:accountMainDescription> <gl-cor:accountType nonNumericContext="s1">account </gl-cor:accountType> </gl-cor:account> <gl-cor:xbrlInfo> <gl-cor:xbrlTaxonomy nonNumericContext="s1"> http://www.xbrl.or.kr/kr/gaap/ci/2005-10-01/kr-gaap-ci-2000-07-31 </gl-cor:xbrlTaxonomy> <gl-cor:xbrlElement nonNumericContext="s1">currentAssets.cashCashEquivalents </gl-cor:xbrlElement> </gl-cor:xbrlInfo>

  26. Benefit expected • Drill Down From Financial Report to GL • Productivity Increase • Work Paper Automation • To be used for Consolidation • To Increase Transparency • Enhanced Quality Control • Save Space by electronic attachments • Remote Review

  27. Considerations • Size Of XBRL File (1,000,000 Records may be 5G Byte) • Speed of Transaction (Much Slower than normal SQL DB) • Referential Integrity (Relationship management) • Assurance of the identical source

  28. Tax Preparation Process Automation (*) Current : Fixed Length Text Electric Report XBRL GL Chart of Accounts Entries Aging Trial Balance GL Inventory Open AP Open AR Tax Working Paper Calculation Validation Tax Report (XBRL) IRS Internal Process Automation ERP Legacy SYS (*) OECD recommends XBRL for tax uses

  29. XBRL Adoption PlanBy Financial Supervisory Service

  30. Financial Information Highway Construction(Based on National Financial Information Framework) XBRL Adoption Plan By Financial Supervisory Service

  31. XBRL Adoption Plan By Financial Supervisory Service

  32. Thank You !!!

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