Copies of papers and bios can be downloaded from the following site. Powerpoints may be added later.
http://web.ku.edu/~eycarat/myssi/
Saturday, April 30, 2011
Tuesday, April 26, 2011
Kansas XBRL Conference April 29-30, 2011
26/04/2011
I'm looking forward to this conference. If my PlayBook ever arrives, I hope to use it to keep a running journal of the event. No luck, so will use my laptop.
Thursday, April 28
7:00 – 9:00 p.m. Preconference Reception - lightly attended
Friday, April 29
8:00 – 8:15 Welcome and Opening remarks by Rajendra Srivastava, University of Kansas
Ernst & Young sponsored
Weather-related cancellations have led to work arounds (e.g., using skype for a few sessions)
Greetings from:
Jim Heintz, AIS Director, University of Kansas
Bruce Snyder, Ernst & Young LLP
Paul Penler, Ernst & Young
8:15 – 9:45 Session I: Panel on “How Does XBRL Affect Business Intelligence and Transparency? Perspectives from Regulators, Filers, Information Intermediaries, and Users"
Session Chair: Paul Penler, Ernst & Young LLP
Panel Members
David Blaszkowsky, SEC
(By skype due to flight cancellation)
Two themes: Transparency and Analysis
Transparency: 2000 filers with 8,000 more this summer,
4000 filings (two waves)
Analysis
4,000,000 data points collected and will grow exponentially; time series data will be available
Novel uses being developed and tested
SEC using XBRL-based analytics
Louis Matherne, FASB
(By skype due to flight cancellation)
FASB has picked up resp for US GAAP FR Taxonomy
Objective is to achieve greater integration with FASBs codification, etc.
Annual Release Schedule
Continuous Taxonomy Development & Exposure
ASU Taxonomy Exposure Process
Go to FASB Resource Page – release notes document changes in taxonomy
Predictions
Short Term –Ttwo waves of filers; learned a lot; consistency due to small number of contact points
text blocks valuable
Third wave will be more voluminous and less sophisticated; more service providers and filing agents; this is most exciting group because will make data available about companies that are too expensive to follow using existing services
will have fewer extensions (0-4% pre detailed tagging)
will move to iXBRL; not panacea; can obfuscate real data
Long Term - Taxonomy will shift to a more hierarchical structure
Greater dimensionalization
Versioning and formula specs
XBRL will become THE official filing
What research needed? Industry-oriented elaboration of taxonomy
Cross-referencing from line items to footnotes
XBRL is the rule engine for principles
Glenn Doggett, CFA
Why viewed as compliance practice rather than a communication tool; until that changes XBRL not effective
Data qualities desired – survey: reliability, consistency, granularity, timeliness, accuracy, comparability
Most analysts use electronic data services – unlikely to change practices until XBRL is more developed
Timeliness – XBRL not as timely; other sources weeks faster due to – press releases, websites, quarterly, supplemental reports, third party data vendors
Is this due to SEC rules? Is it due to use of printer publishers delays?
2011 will make more complete data set available
Detailed footnote tagging is some of the most valuable information but 2013 first year end when that will be true for all companies.
Completeness – operational data, md&a, smaller companies
Consistency – between periods for a company; between companies in a sector; across regulatory structures
Delay of IFRS hinders analysts
Analysts use beyond primary statements contributes to recognition of value of XBRL
Raul Varela, Rivet (most used software for XBRL; also filing agent)
Stats
Similar to Dave Blaszkowsky of SEC
Analysts
Naysayers-extensions, dimensionality of detailed footnotes, reported data not as good, already have what need
Yaysayers – mapping tools, dimensionality will get better; as reported no tie back needed, printer publishers driving adherence
Future
Other regulatory bodies will embrace XBRL for other uses
Faster and better business intelligence
Limited liability expiry will bring XBRL in-house, integrate with internal & external reporting
All data will be tagged
EDGAR will be transformed to focus on XBRL
Data Centric to Document Centric
Q&A
Dave Blaszkowsky – re: expansions; need comments from community, especially analysts;
Under Dodd-Frank natural resource cos to use XBRL to report payments to foreign companies
Single filing, MD&A tagging concept can be used to provide information directly to market; does not necessarily have to go to SEC
Louis Matherne – SEC should remove prohibition on tagging/filing Earnings Releases which are among the most important data to analysts
9:45 – 10:15 Coffee Break
10:15 –12:15 Session II: XBRL Technology – To be or not to be in the Cloud
Session Chair: Andrew Chen, University of Kansas
To Protect and To Serve: Issues for XBRL in the Cloud
Eric Cohen, PwC LLP
Issues: I can’t understand; I can’t find; I can’t trust the information on the net
Auditor’s identity theft: subsequent changes to f/s reported on; association of assured with non-assured; falsely asserting existence of an engagement that didn’t exist
Identify ecosystem:
http://www.whitehouse.gov/sites/default/files/rss_viewer/NSTICstrategy_041511.pdf
Feeding the Information Value Chain: Deriving Analytical Ratios from XBRL filings to the SEC
Roger Debreceny, University of Hawaii-Manoa
d'Eri Alessandro, International Accounting Standards Board
Carsten Felden, Technische Universität Bergakademie, Freiberg
Stephanie Farewell, University of Arkansas at Little Rock
Maciej Piechocki, IFRS Foundation
Is XBRL better than alternative source for calculating standard ratios that analysts typically use?
Identified 70+ ratios but focus on 63; then identified 38 components of these ratios, then identified best taxonomy choice; found that they require 48 elements, but these elements are not always available in the taxonomy or in companies instances
For some ratios, no direct components, must use indirect way to construct; 26 direct; 12 indirect
For some ratios, no data elements, must identify alternatives
Find that for many companies cannot calculate ratios using XBRL data elements or get large differences
Next phase is to explore why
Revamping the Audit Approach using Accounting Equations: Processing XBRL-tagged Data in an XBRL-tagged Top-cycle
Philip Elsas, ComputationalAuditing.Com
Paul Klint, Centrum Wiskunde & Informatica (CWI), Dutch National Research Center for Mathematics and Computer Science
Uses Dutch model of cash cycle to model accounting/business processes
Domain specific language can increase software productivity
Open Source & XBRL: The Arelle Project
Herm Fischer, Mark V Systems Limited
Diane Mueller, XBRLSpy Research Inc.
Describes features of open source XBRL platform
Why now? Community request; XSB survey response
No commercial return; want to achieve ubiquity of XBRL
Arelle is a fully integrated XBRL platform
Based on Python programming language; open source, free
MVC Architecture; Model, View, Controller
API
Features
XBRL parser, discovery, viewer – instance, inline,
XBRL Specs
Disclosure systems – Edgar, Global Filer Manuals
Formula, Localization, Versioning, RSS Feed
http://arelle.org; support@arelle.org – download, documentation, blog
12:15 – 1:15 Lunch
1:30 – 3:00 Session III: Panel on “Using XBRL Data in the Financial Audit”
Session Chair: Skip White, University of Delaware
Panel Members
Campbell Pryde – XBRL US : Who is using XBRL?
Hal Zeidman – KPMG LLP: Impact on financial statement audits?
Matt Slavin – Ernst & Young LLP: Agreed upon procedure engagements
Beth Schneider – Deloitte & Touche LLP: Attestation engagements
Efrim Boritz – University of Waterloo: Future topics
Campbell Pryde – XBRL US : Who is using XBRL?
SEC, FASB, AICPA
Edgar On-line, Thompson Reuters, Bloomberg
Rivet Software, Blue Matrix, FetchXL, SECWatch
Micro Strategy, PrimeAim
Misconceptions
No one is downloading XBRL data from my website - the majority of traffic goes direct to the SEC
Analysts covering my company are not asking for XBRL data - The analyst will just see the data in their spreadsheet or analytical tool oblivious to the technology of how it got there.
Data Aggregators are not using XBRL - yes they are: Thompson, Bloomberg, Edgar-Online; Data Intermediaries are rushing in
Sophisticated Investors are not telling us they are using it.
Why will the data be used?
No redistribution cost
Low acquisition cost
Timely and eventually more accurate
More detailed
No proprietary lock in with specific data vendors
In the last 3 months we have seen a significant increase in XBRL data from specialist data intermediaries.
Issues holding back use
Scope of data (Limited International Coverage)
Lack of Knowledge of data availability
Insufficient tools to consume
Said some of the graphics presented were on XBRL US website - I couldn't find them
Hal Zeidman – KPMG LLP: Impact on financial statement audits?
Audit Planning and Risk Assessment: Impact on Cost, Impact on Audit Quality
Computer Assisted Audit Techniques: Impact on Cost, Impact on Audit Quality
Internal Control Over Financial Reporting: Integrated Approach, Bolt-on Approach
SEC Final Release 33-9002
“As the technology associated with interactive data improves, issuers may integrate interactive data technology into their business information processing, and such integration may have implications regarding internal control over financial reporting no different than any other controls or procedures related to the preparation of financial statements. If this integration occurs, the preparation of financial statements may become interdependent with the interactive data tagging process and an issuer and its auditor should evaluate these changes in the context of their reporting on internal control over financial reporting.”
“However, this evaluation is separate from the preparation and submission of the interactive data file, and as such the results of the evaluation would not require management to assess or an auditor to separately report on the issuer’s interactive data file provided as an exhibit to a filer’s reports or registration statements.”
Matt Slavin – Ernst & Young LLP: Agreed upon procedure engagements
Overview
Auditors are not required (or expected) to:
Read, perform procedures, assess, or issue separate assurance on the XBRL exhibit or controls
Agreed-upon procedures (AUP) engagements are separate from the audit and are less in scope than an audit or review – no assurance is provided.
The objective is to perform procedures in order for management to evaluate the completeness, accuracy and consistency of the XBRL data
Findings represents errors, alternatives, observations and recommendations
Procedures can be customized, but usually focus on:
Tagging selection – use of the taxonomy and extensions
Areas the SEC has identified as frequently having errors (e.g. signs, decimals, date contexts, etc)
Company should evaluate whether findings would improve the XBRL submission and make final judgment related to potential changes
Level of effort:
Typical year 1 engagement takes 2–3 elapsed weeks and ranges from 80–120 hours
Typical year 2 engagement (detail tagging) takes 4–5 elapsed weeks and ranges from 250–400 hours
Volume of findings:
Typical year 1 engagement has comments on ~20% of the tags and companies usually make changes on approximately half of the commented tags
Typical year 2 engagement averages more than 150 comments, with companies making changes on most of the commented areas
AUP engagements - common errors observed
Not tagging all required information
Parenthetical information, amounts in superscript footnotes, amounts written out (e.g., twenty percent), not tagging all amounts in the notes/schedules (Year 2)
Line items that have a non-determinable value (e.g., commitments and contingencies)
Missing required S-X schedules, not including all required levels
Not tagging all of the dimensions (e.g., missing dimensions represented in narrative)
Tag selection
Extending tags unnecessarily or selecting the wrong standard tag
Not using required tags or selecting different tags for the same amount and concept that appear more than one time in the financial statements
Other tag related errors
Wrong signs for the values (i.e., positive versus negative), wrong reporting period dates, wrong decimal settings or wrong amounts (i.e., proper number of zeros),
Wrong or missing calculations, wrong or missing units of measure
Incomplete information provided for extensions tags (e.g., missing debit or credit balances, as required)
Not using XBRL footnote links, as required
Beth Schneider – Deloitte & Touche LLP: Attestation engagements
XBRL examination engagements
Elements of an XBRL examination engagement
Subject matter = XBRL files
Assertion re: source info & taxonomy
Responsible party = management (typically)
Suitable and available criteria (needed):
Objectivity—free from bias
Measurability—permit reasonably consistent measurements
Completeness—relevant factors that would alter a conclusion are not omitted
Relevance—relevant to the subject matter
Current AICPA project
XBRL-related principles: Completeness, Mapping, Accuracy, Structure
Criteria for each principle to assess whether the principle is met
Updating of SOP 09-1
Possible attest scenarios
Source: unaudited, AUP, Review, Examination, Mix
XRL: what combinations possible? Can XBRL assurance be higher than source assurance?
Comments: depends what the opinion is
Efrim Boritz – University of Waterloo: Issues for the Future
Footnotes; risks (extracting accurate meaning from weaknesses in narratives) and opportunities (comparisons, consistency checks, enhanced text mining)
MD&A: key source of information; needs tagging; is EBRC taxonomy sufficient? This can be researched. Another opportunity for research is XBRL-assisted text mining
iBXRL: has momentum, although counter to original conception of XBRL for separating presentation and content; will speed adoption of XBRL but creates risk due to ability of HTML tags to "cover" XBRL tags with inaccurate presentation layer; tools are available to separate out XBRL from HTML tags and will need to be used to address risks.
XBRL-GL: provides opportunity to link/integrate external FR tags with internal tags but will meet resistance unless mandated by external authorities such as tax auditors.
Data level assurance: seems inevitable in the long run to ensure that data elements are interpreted properly; but this is counter to auditors' "f/s as a whole" culture and carries risks that will lead to resistance by auditors.
3:00 – 3:30 Coffee Break
3:30 – 5:30 Session IV: Disclosures, Transparencies, Errors, and Choice of Technology
Session Chair: Mike Ettredge, University of Kansas
The Effect of XBRL Disclosures on Information Environment in the Market: Early Evidence
Joung W. Kim, Nova Southeastern University, Davie, FL
Jee-Hae Lim, University of Waterloo, Canada
Won Gyun No, Iowa State University
Compared companies before and after mandatory XBRL adoption; found that after adoption of XBRL their characteristics improved
Voluntary XBRL Adopters and Firm Characteristics
Srinivasan (Srini) Ragothaman, The University of South Dakota
Firm characteristics of 102 voluntary XBRL adopters during VFP;
More complex, higher market value; more leveraged; higher growth;
Confrms earlier studies but did not consider industry effects, SEC’s offer to process VFP firms earlier as an incentive
XBRL, Excel or PDF? The Effects of Technology Choice on the Analysis of Financial Information
Diane J. Janvrin, Iowa State University
Maureen Mascha, Marquette University
Robert Pinsker , Florida Atlantic University
Studied choices made by non-professional investors (graduate business students) whether to use I-Matrix vs. PDF or Excel to complete an analytical task (choose which of two companies to invest in)
60% chose I-Matrix; rest chose Excel but chosen method did not affect performance
Implies need to better communicate benefits of a particular method
Title incorrectly implies they chose XBRL when in fact they chose different spreadsheets
XBRL: Consequences to Financial Reporting, Data Analysis, Decision Support, and Others
Miklos Vasarhelyi, Rutgers University
David Chan, Rutgers University
Michael Alles, Rutgers University
Review of benefits of XBRL and five predictions of what changes XBRL will bring about
6:30 – 9:00pm Reception and Dinner: Paul Penler, Ernst & Young LLP, “Current Environment - Auditor Procedures on Draft XBRL Exhibits”
Saturday, April 30
8:00– 9:30 Session V: Panel on “Where to Go from Here? The Future of Research on XBRL and Aligned Technologies”
Session Chair: Trevor Stewart, Deloitte & Touche LLP/Rutgers University
Panel Members:
Eric Cohen, PwC LLP
Challenges Obstacles
Scope of academia involvement restricted to AIS academics; others view XBRL as technical; need broader involvement
Understanding that XBRL is its SEC implementation rather than what it could be; invasive vs. win win win
Pull from business and industry
Dan Murray: re: acceptance; financial people want to focus on the accounting not the technology
Miklos: acceptance takes time; taxonomies need to be homogeneous; XBRL should be at transaction level
Roger Debreceny, University of Hawaii- Mānoa
Academics’ goals are to be published
Lessons Learned
Good news: interest by editors is higher; test beds available, awash with data from filings; tagged data from detail filing does not exist in any other format and represents opportunities
Cost of entry to researchers is high; therefore AIS academics can work with financial accounting researchers during the next few years until data aggregators embed this data in their systems
We’re still in 1899 when cars looked like horse drawn carriages; reproducing paper paradigm; however, XBRL will increasingly influence how accounting is viewed in future and change it
Need killer apps; Miklos mentioned AICPA common data receptacle initiative and audit apps store
Miklos: semantic analysis should be used in research
Accounting systems themselves are not robust with use of spreadsheets, multiple adjustments, etc.
Dan O’Leary has case on close process
WebFilings a cloud-based service
Carsten Felden, Technische Universität Bergakademie, Freiberg
Technology, AIS
Main interest in business intelligence
Content, if it is a matter of choice
No meta model for evolving XBRL standards such as inline XBRL
Eric mentioned that XBRL board is working on it
Tools: XBRL supports use of spreadsheet
Is XBRL truly global or local? e.g., US and German contexts very different. SAP dominant in Germany
XML not a sound basis for files with hundreds of millions of records
Dan Murray, WebFilings LLC
Opportunities for XBRL-related services
Background is software engineering
Fin reporting tools not strong enough, not easy enough, not collaborative, challenge of articulation of numbers, closing process very burdensome for many organizations and changes hard to propagate
WebFilings approach is to create a single document that is used to derive XBRL
Mentioned tools such as Fluid DV, Evernote with tagging
Companies
Miklos Vasarhelyi, Rutgers University-Newark
True Electronic Reporting
XBRL not true electronic reporting because is a an implementation of paper paradigm
True electronic reporting has to reflect how managers of a business are measuring business rather than how FASB defines
9 :30-9 :45 Coffee Break
9:45– 11:15 Session VI: Assurance on XBRL Documents – Process, Benefits, and Consequences
Session Chair: Jim Heintz, University of Kansas
Computer-Assisted Functions for Auditing XBRL-Related Documents
Efrim Boritz, University of Waterloo
Won Gyun No, Iowa State University
Described project that identified audit tasks to fulfill key audit objectives for XBRL-related data
Then identified audit functions and developed software to perform
Demonstrated the audit functions during session
A Relative Cost Framework for Rethinking Assurance of XBRL Filings
Michael Alles, Rutgers University-Newark
Glen Gray, California State University-Northridge
Sources of assurance: internal staff skills; software validation; filing agents; external assurance provider
External cost relative to internal cost
External cost relative to preparation cost
AICPA survey indicates internal costs are about $40K
Matt’s presentation indicates AUP costs range from $25K-$100K
Companies will resist paying too much for assurance; so what are the key procedures that need to be done to fit within economically feasible space?
Will this shift onus for assurance to filing agents?
Shift of conversation about assurance to a % of audit fees; framing more acceptable to clients?
Paul Penler: 75% reduction between first and second/third time that AUPs are performed
XBRL Mandate: Thousands of Filing Errors and So What?
Hui Du, University of Houston – Clear Lake
Miklos A. Vasarhelyi, Rutgers University
Xiaochuan Zheng, Bryant University
Identified 4000 errors from 1000 filers in first 6 quarters of mandatory XBRL filings
Focused on changing patterns to assess their importance
Use learning curve theory to identify benchmark learning curve; consider both intra-organizational and inter-organizational learning
Measure learning curves of SEC, filers and software developers
XBRL Cloud EDGAR Dashboard for data (mostly syntactic errors)
Controlled for variety of variables
Found significant learning; i.e., found # of errors dramatically lower in Q2, Q3 and Q4 (but start increasing again in Q5)
Question whether findings due to change in taxonomy from 2008 version to 2009 version; or, XBRLCloud changed how it measured errors or companies saw # of errors reported by XBRLCloud in Q1and corrected those errors in Q2
Suggestion that should use XBRL US Consistency suite which track different data
Should control for June, July, August year ends and also for companies that moved to second tier status when their size dropped
11 :15-11 :30 Coffee Break
11:30– 12:30 Session VII: Assurance on XBRL Documents – Process, Benefits, and Consequences (Continued)
Session Chair: Neal Hannon, WebPro XBRL Consulting
Determinants of the deficiency of XBRL mandatory filings
Saeed J. Roohani, Bryant University
Xiaochuan Zheng, Bryant University
Used XBRCloud data classified according to severity and previous literature on determinants of internal control quality
4532 filings
Firm characteristics: complexity, business stability, financial strength, VFP participation
Filing characteristics: 10Q/10K, % of extensions, # times filing, filing year 2009/2010
Found complexity of firm and % of extensions were the key factors that determined # of errors; for major errors # of times filing led to reduction but for minor errors led to increase in # of errors
The Future of XBRL: A Conceptual Framework
Robert Nehmer, Oakland University
What is the value added of XBRL and when will it be realized?
Reviewed literature on ontological approach
Management Assertions about Financial Statements: Are they Sufficient in the Interactive Data Environment?
Ken Dalton, The University of Kansas
Rajendra Srivastava, The University of Kansas
Discusses inherent assertions of XRL.
12:30 - 1:30 Lunch and Concluding Remarks - Raj Srivastava
I'm looking forward to this conference. If my PlayBook ever arrives, I hope to use it to keep a running journal of the event. No luck, so will use my laptop.
Thursday, April 28
7:00 – 9:00 p.m. Preconference Reception - lightly attended
Friday, April 29
8:00 – 8:15 Welcome and Opening remarks by Rajendra Srivastava, University of Kansas
Ernst & Young sponsored
Weather-related cancellations have led to work arounds (e.g., using skype for a few sessions)
Greetings from:
Jim Heintz, AIS Director, University of Kansas
Bruce Snyder, Ernst & Young LLP
Paul Penler, Ernst & Young
8:15 – 9:45 Session I: Panel on “How Does XBRL Affect Business Intelligence and Transparency? Perspectives from Regulators, Filers, Information Intermediaries, and Users"
Session Chair: Paul Penler, Ernst & Young LLP
Panel Members
David Blaszkowsky, SEC
(By skype due to flight cancellation)
Two themes: Transparency and Analysis
Transparency: 2000 filers with 8,000 more this summer,
4000 filings (two waves)
Analysis
4,000,000 data points collected and will grow exponentially; time series data will be available
Novel uses being developed and tested
SEC using XBRL-based analytics
Louis Matherne, FASB
(By skype due to flight cancellation)
FASB has picked up resp for US GAAP FR Taxonomy
Objective is to achieve greater integration with FASBs codification, etc.
Annual Release Schedule
Continuous Taxonomy Development & Exposure
ASU Taxonomy Exposure Process
Go to FASB Resource Page – release notes document changes in taxonomy
Predictions
Short Term –Ttwo waves of filers; learned a lot; consistency due to small number of contact points
text blocks valuable
Third wave will be more voluminous and less sophisticated; more service providers and filing agents; this is most exciting group because will make data available about companies that are too expensive to follow using existing services
will have fewer extensions (0-4% pre detailed tagging)
will move to iXBRL; not panacea; can obfuscate real data
Long Term - Taxonomy will shift to a more hierarchical structure
Greater dimensionalization
Versioning and formula specs
XBRL will become THE official filing
What research needed? Industry-oriented elaboration of taxonomy
Cross-referencing from line items to footnotes
XBRL is the rule engine for principles
Glenn Doggett, CFA
Why viewed as compliance practice rather than a communication tool; until that changes XBRL not effective
Data qualities desired – survey: reliability, consistency, granularity, timeliness, accuracy, comparability
Most analysts use electronic data services – unlikely to change practices until XBRL is more developed
Timeliness – XBRL not as timely; other sources weeks faster due to – press releases, websites, quarterly, supplemental reports, third party data vendors
Is this due to SEC rules? Is it due to use of printer publishers delays?
2011 will make more complete data set available
Detailed footnote tagging is some of the most valuable information but 2013 first year end when that will be true for all companies.
Completeness – operational data, md&a, smaller companies
Consistency – between periods for a company; between companies in a sector; across regulatory structures
Delay of IFRS hinders analysts
Analysts use beyond primary statements contributes to recognition of value of XBRL
Raul Varela, Rivet (most used software for XBRL; also filing agent)
Stats
Similar to Dave Blaszkowsky of SEC
Analysts
Naysayers-extensions, dimensionality of detailed footnotes, reported data not as good, already have what need
Yaysayers – mapping tools, dimensionality will get better; as reported no tie back needed, printer publishers driving adherence
Future
Other regulatory bodies will embrace XBRL for other uses
Faster and better business intelligence
Limited liability expiry will bring XBRL in-house, integrate with internal & external reporting
All data will be tagged
EDGAR will be transformed to focus on XBRL
Data Centric to Document Centric
Q&A
Dave Blaszkowsky – re: expansions; need comments from community, especially analysts;
Under Dodd-Frank natural resource cos to use XBRL to report payments to foreign companies
Single filing, MD&A tagging concept can be used to provide information directly to market; does not necessarily have to go to SEC
Louis Matherne – SEC should remove prohibition on tagging/filing Earnings Releases which are among the most important data to analysts
9:45 – 10:15 Coffee Break
10:15 –12:15 Session II: XBRL Technology – To be or not to be in the Cloud
Session Chair: Andrew Chen, University of Kansas
To Protect and To Serve: Issues for XBRL in the Cloud
Eric Cohen, PwC LLP
Issues: I can’t understand; I can’t find; I can’t trust the information on the net
Auditor’s identity theft: subsequent changes to f/s reported on; association of assured with non-assured; falsely asserting existence of an engagement that didn’t exist
Identify ecosystem:
http://www.whitehouse.gov/sites/default/files/rss_viewer/NSTICstrategy_041511.pdf
Feeding the Information Value Chain: Deriving Analytical Ratios from XBRL filings to the SEC
Roger Debreceny, University of Hawaii-Manoa
d'Eri Alessandro, International Accounting Standards Board
Carsten Felden, Technische Universität Bergakademie, Freiberg
Stephanie Farewell, University of Arkansas at Little Rock
Maciej Piechocki, IFRS Foundation
Is XBRL better than alternative source for calculating standard ratios that analysts typically use?
Identified 70+ ratios but focus on 63; then identified 38 components of these ratios, then identified best taxonomy choice; found that they require 48 elements, but these elements are not always available in the taxonomy or in companies instances
For some ratios, no direct components, must use indirect way to construct; 26 direct; 12 indirect
For some ratios, no data elements, must identify alternatives
Find that for many companies cannot calculate ratios using XBRL data elements or get large differences
Next phase is to explore why
Revamping the Audit Approach using Accounting Equations: Processing XBRL-tagged Data in an XBRL-tagged Top-cycle
Philip Elsas, ComputationalAuditing.Com
Paul Klint, Centrum Wiskunde & Informatica (CWI), Dutch National Research Center for Mathematics and Computer Science
Uses Dutch model of cash cycle to model accounting/business processes
Domain specific language can increase software productivity
Open Source & XBRL: The Arelle Project
Herm Fischer, Mark V Systems Limited
Diane Mueller, XBRLSpy Research Inc.
Describes features of open source XBRL platform
Why now? Community request; XSB survey response
No commercial return; want to achieve ubiquity of XBRL
Arelle is a fully integrated XBRL platform
Based on Python programming language; open source, free
MVC Architecture; Model, View, Controller
API
Features
XBRL parser, discovery, viewer – instance, inline,
XBRL Specs
Disclosure systems – Edgar, Global Filer Manuals
Formula, Localization, Versioning, RSS Feed
http://arelle.org; support@arelle.org – download, documentation, blog
12:15 – 1:15 Lunch
1:30 – 3:00 Session III: Panel on “Using XBRL Data in the Financial Audit”
Session Chair: Skip White, University of Delaware
Panel Members
Campbell Pryde – XBRL US : Who is using XBRL?
Hal Zeidman – KPMG LLP: Impact on financial statement audits?
Matt Slavin – Ernst & Young LLP: Agreed upon procedure engagements
Beth Schneider – Deloitte & Touche LLP: Attestation engagements
Efrim Boritz – University of Waterloo: Future topics
Campbell Pryde – XBRL US : Who is using XBRL?
SEC, FASB, AICPA
Edgar On-line, Thompson Reuters, Bloomberg
Rivet Software, Blue Matrix, FetchXL, SECWatch
Micro Strategy, PrimeAim
Misconceptions
No one is downloading XBRL data from my website - the majority of traffic goes direct to the SEC
Analysts covering my company are not asking for XBRL data - The analyst will just see the data in their spreadsheet or analytical tool oblivious to the technology of how it got there.
Data Aggregators are not using XBRL - yes they are: Thompson, Bloomberg, Edgar-Online; Data Intermediaries are rushing in
Sophisticated Investors are not telling us they are using it.
Why will the data be used?
No redistribution cost
Low acquisition cost
Timely and eventually more accurate
More detailed
No proprietary lock in with specific data vendors
In the last 3 months we have seen a significant increase in XBRL data from specialist data intermediaries.
Issues holding back use
Scope of data (Limited International Coverage)
Lack of Knowledge of data availability
Insufficient tools to consume
Said some of the graphics presented were on XBRL US website - I couldn't find them
Hal Zeidman – KPMG LLP: Impact on financial statement audits?
Audit Planning and Risk Assessment: Impact on Cost, Impact on Audit Quality
Computer Assisted Audit Techniques: Impact on Cost, Impact on Audit Quality
Internal Control Over Financial Reporting: Integrated Approach, Bolt-on Approach
SEC Final Release 33-9002
“As the technology associated with interactive data improves, issuers may integrate interactive data technology into their business information processing, and such integration may have implications regarding internal control over financial reporting no different than any other controls or procedures related to the preparation of financial statements. If this integration occurs, the preparation of financial statements may become interdependent with the interactive data tagging process and an issuer and its auditor should evaluate these changes in the context of their reporting on internal control over financial reporting.”
“However, this evaluation is separate from the preparation and submission of the interactive data file, and as such the results of the evaluation would not require management to assess or an auditor to separately report on the issuer’s interactive data file provided as an exhibit to a filer’s reports or registration statements.”
Matt Slavin – Ernst & Young LLP: Agreed upon procedure engagements
Overview
Auditors are not required (or expected) to:
Read, perform procedures, assess, or issue separate assurance on the XBRL exhibit or controls
Agreed-upon procedures (AUP) engagements are separate from the audit and are less in scope than an audit or review – no assurance is provided.
The objective is to perform procedures in order for management to evaluate the completeness, accuracy and consistency of the XBRL data
Findings represents errors, alternatives, observations and recommendations
Procedures can be customized, but usually focus on:
Tagging selection – use of the taxonomy and extensions
Areas the SEC has identified as frequently having errors (e.g. signs, decimals, date contexts, etc)
Company should evaluate whether findings would improve the XBRL submission and make final judgment related to potential changes
Level of effort:
Typical year 1 engagement takes 2–3 elapsed weeks and ranges from 80–120 hours
Typical year 2 engagement (detail tagging) takes 4–5 elapsed weeks and ranges from 250–400 hours
Volume of findings:
Typical year 1 engagement has comments on ~20% of the tags and companies usually make changes on approximately half of the commented tags
Typical year 2 engagement averages more than 150 comments, with companies making changes on most of the commented areas
AUP engagements - common errors observed
Not tagging all required information
Parenthetical information, amounts in superscript footnotes, amounts written out (e.g., twenty percent), not tagging all amounts in the notes/schedules (Year 2)
Line items that have a non-determinable value (e.g., commitments and contingencies)
Missing required S-X schedules, not including all required levels
Not tagging all of the dimensions (e.g., missing dimensions represented in narrative)
Tag selection
Extending tags unnecessarily or selecting the wrong standard tag
Not using required tags or selecting different tags for the same amount and concept that appear more than one time in the financial statements
Other tag related errors
Wrong signs for the values (i.e., positive versus negative), wrong reporting period dates, wrong decimal settings or wrong amounts (i.e., proper number of zeros),
Wrong or missing calculations, wrong or missing units of measure
Incomplete information provided for extensions tags (e.g., missing debit or credit balances, as required)
Not using XBRL footnote links, as required
Beth Schneider – Deloitte & Touche LLP: Attestation engagements
XBRL examination engagements
Elements of an XBRL examination engagement
Subject matter = XBRL files
Assertion re: source info & taxonomy
Responsible party = management (typically)
Suitable and available criteria (needed):
Objectivity—free from bias
Measurability—permit reasonably consistent measurements
Completeness—relevant factors that would alter a conclusion are not omitted
Relevance—relevant to the subject matter
Current AICPA project
XBRL-related principles: Completeness, Mapping, Accuracy, Structure
Criteria for each principle to assess whether the principle is met
Updating of SOP 09-1
Possible attest scenarios
Source: unaudited, AUP, Review, Examination, Mix
XRL: what combinations possible? Can XBRL assurance be higher than source assurance?
Comments: depends what the opinion is
Efrim Boritz – University of Waterloo: Issues for the Future
Footnotes; risks (extracting accurate meaning from weaknesses in narratives) and opportunities (comparisons, consistency checks, enhanced text mining)
MD&A: key source of information; needs tagging; is EBRC taxonomy sufficient? This can be researched. Another opportunity for research is XBRL-assisted text mining
iBXRL: has momentum, although counter to original conception of XBRL for separating presentation and content; will speed adoption of XBRL but creates risk due to ability of HTML tags to "cover" XBRL tags with inaccurate presentation layer; tools are available to separate out XBRL from HTML tags and will need to be used to address risks.
XBRL-GL: provides opportunity to link/integrate external FR tags with internal tags but will meet resistance unless mandated by external authorities such as tax auditors.
Data level assurance: seems inevitable in the long run to ensure that data elements are interpreted properly; but this is counter to auditors' "f/s as a whole" culture and carries risks that will lead to resistance by auditors.
3:00 – 3:30 Coffee Break
3:30 – 5:30 Session IV: Disclosures, Transparencies, Errors, and Choice of Technology
Session Chair: Mike Ettredge, University of Kansas
The Effect of XBRL Disclosures on Information Environment in the Market: Early Evidence
Joung W. Kim, Nova Southeastern University, Davie, FL
Jee-Hae Lim, University of Waterloo, Canada
Won Gyun No, Iowa State University
Compared companies before and after mandatory XBRL adoption; found that after adoption of XBRL their characteristics improved
Voluntary XBRL Adopters and Firm Characteristics
Srinivasan (Srini) Ragothaman, The University of South Dakota
Firm characteristics of 102 voluntary XBRL adopters during VFP;
More complex, higher market value; more leveraged; higher growth;
Confrms earlier studies but did not consider industry effects, SEC’s offer to process VFP firms earlier as an incentive
XBRL, Excel or PDF? The Effects of Technology Choice on the Analysis of Financial Information
Diane J. Janvrin, Iowa State University
Maureen Mascha, Marquette University
Robert Pinsker , Florida Atlantic University
Studied choices made by non-professional investors (graduate business students) whether to use I-Matrix vs. PDF or Excel to complete an analytical task (choose which of two companies to invest in)
60% chose I-Matrix; rest chose Excel but chosen method did not affect performance
Implies need to better communicate benefits of a particular method
Title incorrectly implies they chose XBRL when in fact they chose different spreadsheets
XBRL: Consequences to Financial Reporting, Data Analysis, Decision Support, and Others
Miklos Vasarhelyi, Rutgers University
David Chan, Rutgers University
Michael Alles, Rutgers University
Review of benefits of XBRL and five predictions of what changes XBRL will bring about
6:30 – 9:00pm Reception and Dinner: Paul Penler, Ernst & Young LLP, “Current Environment - Auditor Procedures on Draft XBRL Exhibits”
Saturday, April 30
8:00– 9:30 Session V: Panel on “Where to Go from Here? The Future of Research on XBRL and Aligned Technologies”
Session Chair: Trevor Stewart, Deloitte & Touche LLP/Rutgers University
Panel Members:
Eric Cohen, PwC LLP
Challenges Obstacles
Scope of academia involvement restricted to AIS academics; others view XBRL as technical; need broader involvement
Understanding that XBRL is its SEC implementation rather than what it could be; invasive vs. win win win
Pull from business and industry
Dan Murray: re: acceptance; financial people want to focus on the accounting not the technology
Miklos: acceptance takes time; taxonomies need to be homogeneous; XBRL should be at transaction level
Roger Debreceny, University of Hawaii- Mānoa
Academics’ goals are to be published
Lessons Learned
Good news: interest by editors is higher; test beds available, awash with data from filings; tagged data from detail filing does not exist in any other format and represents opportunities
Cost of entry to researchers is high; therefore AIS academics can work with financial accounting researchers during the next few years until data aggregators embed this data in their systems
We’re still in 1899 when cars looked like horse drawn carriages; reproducing paper paradigm; however, XBRL will increasingly influence how accounting is viewed in future and change it
Need killer apps; Miklos mentioned AICPA common data receptacle initiative and audit apps store
Miklos: semantic analysis should be used in research
Accounting systems themselves are not robust with use of spreadsheets, multiple adjustments, etc.
Dan O’Leary has case on close process
WebFilings a cloud-based service
Carsten Felden, Technische Universität Bergakademie, Freiberg
Technology, AIS
Main interest in business intelligence
Content, if it is a matter of choice
No meta model for evolving XBRL standards such as inline XBRL
Eric mentioned that XBRL board is working on it
Tools: XBRL supports use of spreadsheet
Is XBRL truly global or local? e.g., US and German contexts very different. SAP dominant in Germany
XML not a sound basis for files with hundreds of millions of records
Dan Murray, WebFilings LLC
Opportunities for XBRL-related services
Background is software engineering
Fin reporting tools not strong enough, not easy enough, not collaborative, challenge of articulation of numbers, closing process very burdensome for many organizations and changes hard to propagate
WebFilings approach is to create a single document that is used to derive XBRL
Mentioned tools such as Fluid DV, Evernote with tagging
Companies
Miklos Vasarhelyi, Rutgers University-Newark
True Electronic Reporting
XBRL not true electronic reporting because is a an implementation of paper paradigm
True electronic reporting has to reflect how managers of a business are measuring business rather than how FASB defines
9 :30-9 :45 Coffee Break
9:45– 11:15 Session VI: Assurance on XBRL Documents – Process, Benefits, and Consequences
Session Chair: Jim Heintz, University of Kansas
Computer-Assisted Functions for Auditing XBRL-Related Documents
Efrim Boritz, University of Waterloo
Won Gyun No, Iowa State University
Described project that identified audit tasks to fulfill key audit objectives for XBRL-related data
Then identified audit functions and developed software to perform
Demonstrated the audit functions during session
A Relative Cost Framework for Rethinking Assurance of XBRL Filings
Michael Alles, Rutgers University-Newark
Glen Gray, California State University-Northridge
Sources of assurance: internal staff skills; software validation; filing agents; external assurance provider
External cost relative to internal cost
External cost relative to preparation cost
AICPA survey indicates internal costs are about $40K
Matt’s presentation indicates AUP costs range from $25K-$100K
Companies will resist paying too much for assurance; so what are the key procedures that need to be done to fit within economically feasible space?
Will this shift onus for assurance to filing agents?
Shift of conversation about assurance to a % of audit fees; framing more acceptable to clients?
Paul Penler: 75% reduction between first and second/third time that AUPs are performed
XBRL Mandate: Thousands of Filing Errors and So What?
Hui Du, University of Houston – Clear Lake
Miklos A. Vasarhelyi, Rutgers University
Xiaochuan Zheng, Bryant University
Identified 4000 errors from 1000 filers in first 6 quarters of mandatory XBRL filings
Focused on changing patterns to assess their importance
Use learning curve theory to identify benchmark learning curve; consider both intra-organizational and inter-organizational learning
Measure learning curves of SEC, filers and software developers
XBRL Cloud EDGAR Dashboard for data (mostly syntactic errors)
Controlled for variety of variables
Found significant learning; i.e., found # of errors dramatically lower in Q2, Q3 and Q4 (but start increasing again in Q5)
Question whether findings due to change in taxonomy from 2008 version to 2009 version; or, XBRLCloud changed how it measured errors or companies saw # of errors reported by XBRLCloud in Q1and corrected those errors in Q2
Suggestion that should use XBRL US Consistency suite which track different data
Should control for June, July, August year ends and also for companies that moved to second tier status when their size dropped
11 :15-11 :30 Coffee Break
11:30– 12:30 Session VII: Assurance on XBRL Documents – Process, Benefits, and Consequences (Continued)
Session Chair: Neal Hannon, WebPro XBRL Consulting
Determinants of the deficiency of XBRL mandatory filings
Saeed J. Roohani, Bryant University
Xiaochuan Zheng, Bryant University
Used XBRCloud data classified according to severity and previous literature on determinants of internal control quality
4532 filings
Firm characteristics: complexity, business stability, financial strength, VFP participation
Filing characteristics: 10Q/10K, % of extensions, # times filing, filing year 2009/2010
Found complexity of firm and % of extensions were the key factors that determined # of errors; for major errors # of times filing led to reduction but for minor errors led to increase in # of errors
The Future of XBRL: A Conceptual Framework
Robert Nehmer, Oakland University
What is the value added of XBRL and when will it be realized?
Reviewed literature on ontological approach
Management Assertions about Financial Statements: Are they Sufficient in the Interactive Data Environment?
Ken Dalton, The University of Kansas
Rajendra Srivastava, The University of Kansas
Discusses inherent assertions of XRL.
12:30 - 1:30 Lunch and Concluding Remarks - Raj Srivastava
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