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IAASB’s Project on XBRL

IAASB’s Project on XBRL. Kathleen Healy, Senior Technical Manager. XBRL International Conference. Rome, Italy. April 21, 2010. About the IAASB. Overview of the IAASB. Mission – To serve the public interest by:

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IAASB’s Project on XBRL

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  1. IAASB’s Project on XBRL Kathleen Healy, Senior Technical Manager XBRL International Conference Rome, Italy April 21, 2010

  2. About the IAASB Overview of the IAASB • Mission – To serve the public interest by: • Setting high-quality international standards on auditing, assurance and related services, and on quality control; and • Facilitating international convergence with those standards • Independent standard-setting board that develops and issues International Standards on its own authority • Public oversight of its due process by the Public Interest Oversight Board

  3. About the IAASB Overview of the IAASB – cont. • Wide international representation through volunteer members from around the world • Stakeholder input from the IAASB Consultative Advisory Group – investors, preparers, regulators, users • International Standards on: • Auditing (ISAs); other assurance engagements; related services • Quality Control (ISQC 1)

  4. Clarified ISAs The Clarity Project • Completed March 2009; Clarity ISAs are now effective • For periods beginning on or after 15 Dec 2009 • Purpose of enhancing quality and uniformity of practice • Clarity and understandability of the standards, capable of consistent application • New drafting conventions applied: new structure describing practitioner’s obligations • Suite of 36 ISAs and ISQC 1 • Revision of approx. half of the suite of ISAs

  5. Clarified ISAs Global Acceptance of ISAs • 125+ countries adopt or use ISAs • IFAC online tool, Adoption Chart • 23/25 world’s capital markets, use for foreign issuers • IOSCO supports use in cross-border capital raisings • Recognition: World Bank, Basel Committee, World Federation of Exchanges, Financial Stability Board, INTOSAI • Top 22 global auditing networks’ methodologies align (Forum of Firms)

  6. XBRL Overview of the IAASB’s Project on XBRL • Project approved March 2009 • To consider whether a standard or guidance is needed: • Whether procedures on XBRL should be part of the financial statement audit? • Whether a need for assurance on XBRL-tagged data or the process to create it exists? • How might XBRL change the audit?

  7. XBRL Overview of the IAASB’s Project (cont.) • Use of XBRL largely driven by regulatory requirements and varies by jurisdiction • Regulators not requiring assurance on XBRL-tagged data, but will they? • Consultation needed to determine the appropriate way forward • To ensure what may be developed responds to a global need and is in the public interest

  8. XBRL Staff Q&A on XBRL – Issued January 2010 • Provides educational material on XBRL • Clarifies that the ISAs do not require auditors to perform procedures or provide assurance on XBRL-tagged data in the context of audited financial statements • Highlights services practitioners may be asked to provide • Outlines IAASB’s planned consultations

  9. XBRL IAASB’s Consultation Process on XBRL • Targeting groups and jurisdictions moving in earnest with XBRL with relevant experience • XBRL International’s Assurance Committee • Regulators, treasury departments and tax authorities, accounting firms • IFAC Member Bodies and regional accounting associations – AICPA, FEE, ICAEW, national standard setters • Preparers, investors and users

  10. XBRL Key Areas of Focus in the Consultation • How XBRL is used in particular jurisdictions • Who are the “users” of XBRL information and what do they expect in terms of assurance • Whether it is the public interest for auditors to perform some level of procedures in all audits • If yes, nature and extent of procedures • If no, how can the auditor’s association be better communicated

  11. XBRL Key Areas of Focus in the Consultation (cont.) • If assurance is required or requested – process or data? • How do concepts like materiality and “true and fair view” apply in the case of XBRL? • How preparers are being educated and coping with requirements to use XBRL • Outsourcing and reliance on software solutions • Requests for practitioners to deliver services

  12. XBRL Possible Services Relating to XBRL • Agreed-upon procedures to address accuracy, completeness or consistency of XBRL-tagged data • Examinations of the accuracy of XBRL-tagged data • Assurance on the controls related to the XBRL-tagging process • Advice on the XBRL implementation process • Preparation of the XBRL-tagged data (where not prohibited by relevant independence requirements)

  13. XBRL Developments in the UK and Europe • iXBRL introduced by HMRC (tax authorities) as the required format for financial statements • Affects tax returns due after 31 March 2011 • No requirement for public disclosure • ICAEW XBRL Assurance Working Group • Working to assist companies, auditors, regulators and others adapt to the changing environment • Guidance on agreed-upon procedures first step

  14. XBRL Developments in the UK and Europe (cont.) • FEE Policy Position on XBRL and Roundtable • Promoting awareness about XBRL • Encouraging further education and training for preparers and auditors • Tagging requires knowledge of IT, familiarity with taxonomies, and an understanding of the financial reporting framework • Dialogue with European Commission and Committee of European Securities Regulators

  15. XBRL Research Initiatives and Other Surveys • Research on XBRL echoes key issues • CFA Institute surveys show increased preparer awareness of XBRL and question of assurance • ACCA surveys show need to educate auditors • IAAER / ACCA funded research – The Implications of XBRL for the Financial Statement Audit • Debreceny, Farewell, and Verkruijsse

  16. For more information, visit www.iaasb.org Kathleen Healy Staff Support for the IAASB XBRL Task Force

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