Transcript Supply & Demand for Accounting PhDs

Discussion of “ComputerAssisted Tools for Auditing XBRLRelated Documents”
Symposium on Information Integrity &
Information Systems Assurance
David Plumlee
University of Utah
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How to Spend a Saturday Afternoon
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Significance and Contribution
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Significance of the question
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Assurance in XBRL-related documents is inevitable
Conducting the procedures manually is tedious and
not fully reliable
Contributions
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Lays out a set of a assurance objectives
Describes software that assists auditors (and others)
in meeting the assurance objectives
Some insights into the XBRL knowledge of a limited
number of members of the Information Systems
Audit and Control Association
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Assurance Objective – Internal Control
To determine whether the controls over the
creation of the XBRL-related document
are operating effectively (and efficiently)
 Do we care whether they are efficient?
 We would benefit from some details about how
XBRL-related controls would be assessed.
 In the US, what happens when the tagging
process is integrated into the financial
reporting system? (in the case no reliance was
placed of controls)
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Other Assurance Objectives
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Suitability – “appropriateness” is in the eye of
the beholder
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For example, the client feels that
“OperatingExpensesWithCOGS” in their taxonomy
extension is sufficiently different from
“OperatingExpenses” in the official taxonomy
There needs to be a more objective criterion for
suitability.
Accuracy – how do you apply “in all material
respects” to the XBRL setting where tagged
facts can be extracted from EDGAR in isolation?
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Man versus Machine
• Assess validity
• Graphically represent
- systematic structure
- XBRL taxonomy
• Render elements
• Map business facts to the XBRLtagged data
• Determine whether documents
have required information
• Assess the appropriateness of the
elements
• Determine whether “similar”
elements are created in extension
taxonomies
• Determine that the instance
document does not contain
information not in the official filing
• Determine that the same
taxonomies and rules were applied
to create context information
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The Role of Rendering
In a world where individual items are extracted by
users from a database like EDGAR, is rendering
the right tool for the auditor?
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Will rendering reveal intentionally wrong tags?
Will rendering lead to a false confidence in the
correctness of the tags?
Is fatigue in “ocular analysis” an issue?
Should there be standards for rendering
software that make it easier for preparers, users
and auditors?
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What Else Can Be Automated?
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Focus on exceptions
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Same tag in multiple instances
Compare contexts for common tags
Industry-based templates focusing on “standard
items”
Standard disclosures; e.g., Pension footnote
More easily analyzed by software agents
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Semantic languages and tools that exploit intelligent
reasoning
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Is there a role for risk assessments?
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Can the auditor use the risk of mis-tagging to
reduce the number of tags that must be
evaluated in detail on a given engagement?
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Items tagged on a basis consistent with last year?
Amounts that even if 100% wrong would be
immaterial by financial audit guidelines.
Will the proposed process detect intentional
mis-tagging?
Are the results of XBRL internal control
evaluations useful in designing the “substantive”
tagging procedures?
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Workshop Participants’ Opinions on
XBRL-related Assurance
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What information was gathered?
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What questions were asked?
How were the scales labeled?
What were the ranges (may be Std. Deviations)
of the responses?
Are there demographic variables that explain
variation in the knowledge ratings or the
rankings?
Are other populations interesting/relevant?
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Conclusions
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Professors Boritz and No are ahead of the
regulators who have been reluctant to mandate
assurance on XBRL-related documents.
XBRL Audit Assistant points out the current
advantages and limitations of computer
technology in the XBRL assurance setting.
There are serious limitations in the knowledge
of professionals who will be called on to provide
XBRL assurance.
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