Reporting Technologies and Textual Readability: Evidence from the XBRL Mandate

2021 ◽  
Author(s):  
Xitong Li ◽  
Hongwei Zhu ◽  
Luo Zuo
Keyword(s):  
Financial Reporting ◽  
Financial Statements ◽  
Securities And Exchange Commission ◽  
Annual Reports ◽  
Financial Reports ◽  
Public Firms ◽  
Business Reporting ◽  
Perceived Benefit ◽  
Research Opportunity ◽  
Negative Effect

The eXtensible Business Reporting Language (XBRL) can standardize numerical disclosures and make it easier for computers to process and compare financial reports. This perceived benefit of XBRL has prompted the U.S. Securities and Exchange Commission to mandate that public firms must submit financial statements in the XBRL format as part of their financial reports. Leveraging the research opportunity created by the XBRL mandate, we examine whether financial reporting technologies affect how firms construct textual disclosures. We find that the initial adopters’ HTML-formatted annual reports become harder to read after the XBRL mandate. Further analysis reveals that this effect is concentrated among adopters with more quantitative disclosures, a smaller firm size, or a higher level of financial complexity. Importantly, we show that managers’ reduced attention to preparing HTML-formatted annual reports, rather than increased disclosures, is likely the explanation for this decrease in textual readability. We also find that the negative effect on textual readability persists at least in the subsequent year. Our findings suggest that the XBRL adopters need to pay attention to process optimization and technology enablement to mitigate the possible negative effect of XBRL adoption on the readability of financial reports.

Adios! Airways: An Assignment on Mapping Financial Statements to the U.S. GAAP XBRL Taxonomy

2010 ◽  
Vol 25 (3) ◽  
pp. 465-488 ◽  
Author(s):  
Roger Debreceny ◽  
Stephanie Farewell
Keyword(s):  
Financial Reporting ◽  
Financial Statements ◽  
Securities And Exchange Commission ◽  
Financial Statement ◽  
Annual Reports ◽  
Business Reporting ◽  
Instructional Resource ◽  
Mapping Process ◽  
Interactive Data ◽  
The U.S

ABSTRACT: XBRL, based on XML, is an Internet language for disclosure of business reporting language. XBRL is the technological foundation for the interactive data mandate by the Securities and Exchange Commission (SEC). The mandate requires corporate filers to disclose data in quarterly and annual reports in XBL. A key building block supporting the mandate is a substantial U.S. GAAP XBRL taxonomy that encapsulates most of the reporting concepts found in financial reporting. Filers must align their existing reports to the taxonomy. The accuracy of mapping financial statement line items to the U.S. GAAP taxonomy is of fundamental importance. Mapping errors may be as simple as mapping to an incorrect taxonomy concept, which should be discovered during review. Ineffective mapping may lead to unnecessary extensions, which hinders comparability. This instructional resource guides students through the steps in mapping financial statement line items to the taxonomy. While the case does not require students to create an extended taxonomy, it does require completion of a spreadsheet detailing the mapping process that is typical of practice. In addition, the resource provides a checklist that users can refer to during the mapping process.

scholarly journals Users’ Perspective of Extensible Business Reporting Language (XBRL) in India

2017 ◽  
Vol 3 (2) ◽  
Author(s):  
S. Raghavendra Raju ◽  
B. Mahadevappa
Keyword(s):  
Financial Reporting ◽  
Paradigm Shift ◽  
Electronic Communication ◽  
Financial Statements ◽  
Financial Data ◽  
Annual Reports ◽  
Primary Data ◽  
Business Reporting ◽  
The Difference ◽  
Qualitative Characteristics

There has been a paradigm shift in financial reporting after the introduction of Extensible Business Reporting Language (XBRL). XBRL is a language for electronic communication of business and financial data. The Ministry of Corporate Affairs of Government of India has mandated e-filing of annual reports for certain class of companies in XBRL format from April 1, 2011. Now, more than 1 lakh companies are filing their financial statements through XBRL. The purpose of this paper is to know the users’ awareness about XBRL. The sample for the study includes 76 users. Research instrument was constructed to collect the primary data from the respondents. Hypothesis was tested to know the difference in the users’ perspective about XBRL. The results of the study were presented in five qualitative characteristics: understandability, reliability, relevance, comparability, and timeliness. The results of the paper indicate that there is more understandability, reliability, and relevance of financial statements among the users along with easier comparison of XBRL reports across companies.

scholarly journals FRAUDULENT FINANCIAL REPORTING: A PENTAGON FRAUD ANALYSIS

2019 ◽  
Vol 16 (2) ◽  
pp. 122-134
Author(s):  
Satria tri Nanda ◽  
Neneng Salmiah ◽  
Dina Mulyana
Keyword(s):  
Financial Reporting ◽  
Financial Stability ◽  
Stock Exchange ◽  
Secondary Data ◽  
Financial Statements ◽  
Annual Reports ◽  
Manufacturing Companies ◽  
Fraudulent Financial Reporting ◽  
Financial Reports ◽  
Fraudulent Financial Statements

Financial statements describe the company's financial condition. There are many gaps in the financial reports that enable management to commit fraudulent financial reporting. This study purpose to analyze the pentagon fraud, namely the pressure that is proxied by the financial target, the opportunity that is proxied by the effectiveness of monitoring (ineffective monitoring); Rationalization which is proxied by change in auditor; Competence which is proxied by the change of company directors; and Arrogance which is proxied by the number of CEO images that appear (number of CEO's picture), detects fraudulent financial statements measured using the Altman Z Score. The sample used in this study were 24 pharmaceutical sub-sector manufacturing companies registered on the Indonesia Stock Exchange during the period 2015 until 2017. The type of data used is secondary data obtained from annual reports and company financial statements for the 2015-2017 period. The analysis of the data used is multiple regression using the SPSS version 16. This study found that financial stability and ineffective monitoring influence fraudulent financial statements. Whereas auditor turnover, change of directors and the number of CEO photos that appear do not affect fraudulent financial statements.

A Perspective on the SEC’s Proposal to Accept Financial Statements Prepared in Accordance with International Financial Reporting Standards (IFRS) without Reconciliation to U.S. GAAP

2008 ◽  
Vol 22 (2) ◽  
pp. 241-248 ◽  
Author(s):  
Karim Jamal ◽  
George J. Benston ◽  
Douglas R. Carmichael ◽  
Theodore E. Christensen ◽  
Robert H. Colson ◽  
...  
Keyword(s):  
Financial Reporting ◽  
Financial Statements ◽  
Securities And Exchange Commission ◽  
International Financial Reporting Standards ◽  
Reporting Standards ◽  
Financial Reports ◽  
Financial Reporting Standards ◽  
Regulatory Changes ◽  
Better Than

SYNOPSIS: The Securities and Exchange Commission (SEC) recently issued a call for comment on a proposal to accept financial statements prepared in accordance with International Financial Reporting Standards (IFRS) without reconciliation to U.S. GAAP. Accounting researchers have attempted to assess the quality of IFRS using different methods and criteria. While we are skeptical of drawing direct conclusions about the SEC’s proposal based on this research, there is adequate evidence that both IFRS and U.S. GAAP provide useful information to investors and other users of financial statements. Moreover, we see no conclusive research evidence that financial reports prepared using U.S. GAAP are better than reports prepared using IFRS. The prudent approach when faced with alternatives with no clear difference in quality is to promote competition among them, which supports adopting the SEC’s proposal to permit foreign private issuers a choice between IFRS and U.S. GAAP. Furthermore, to help improve U.S. and international GAAP through standards-setting competition, we recommend that the Commission extend the choice of IFRS to U.S. companies, and require all companies to indicate clearly whether they are filing under U.S. GAAP or IFRS. Finally, we recommend that the Commission and its staff investigate and seek feedback on the educational consequences of its proposed actions. This attention will help educators to better prepare future professionals to implement these proposed regulatory changes.

Section 404 Compliance and Financial Reporting Quality

2010 ◽  
Vol 24 (3) ◽  
pp. 441-454 ◽  
Author(s):  
Albert L. Nagy
Keyword(s):  
Financial Reporting ◽  
Internal Control ◽  
Reporting Quality ◽  
Financial Statements ◽  
Securities And Exchange Commission ◽  
Small Companies ◽  
Section 404 ◽  
Financial Reports ◽  
Sarbanes Oxley

SYNOPSIS: This study examines whether the Sarbanes-Oxley Act Section 404 (S404) compliance efforts lead to higher quality financial reports. An objective of S404 is to encourage companies to devote adequate resources and attention to their internal control systems, which should lead to more reliable financial statements. A natural laboratory of S404 compliance and noncompliance companies exists because the Securities and Exchange Commission has deferred the S404 compliance date for small companies (nonaccelerated filers). A logistic regression model is estimated using a sample of companies surrounding the S404 compliance threshold to measure the S404 compliance effect on the likelihood of issuing materially misstated financial statements. The results show a significant and negative relation between S404 compliance and issuance of materially misstated financial statements, and suggest that the S404 regulation is meeting its objective of improving the quality of financial reports.

Do Quarterly and Annual Financial Statements Reflect Similar Financial Statement Error in the Post-SOX Era?

2021 ◽  
Vol 6 (1) ◽  
pp. 1-31
Author(s):  
Erik S. Boyle ◽  
Melissa F. Lewis-Western ◽  
Timothy A. Seidel
Keyword(s):  
Financial Reporting ◽  
Financial Statements ◽  
Data Availability ◽  
Financial Statement ◽  
Annual Reports ◽  
Fiscal Year ◽  
High Quality ◽  
Financial Reports ◽  
Quality Reporting ◽  
Public Company

ABSTRACT The U.S. has invested substantial resources into the regulation and oversight of public-company financial reporting. While these investments should incentivize high-quality reporting among quarterly and annual financial statements, the sharp rise in public company auditor oversight may disproportionately benefit annual reports given the fiscal year-centric nature of audits. We compare the within company-year difference in financial statement error between quarterly and annual financial reports and examine how any difference changed following SOX. We find that pre-SOX error is lower for audited financial statements than for reviewed financial statements and that this difference increases following SOX. Additional tests suggest that elevated auditor oversight, rather than managerial incentives, is the impetus for the change. Despite regulatory investment designed to incentivize the production of high-quality quarterly and annual financial statements, the post-SOX difference in error between quarterly and annual financial statements appears to have increased. Data Availability: Data are available from public sources cited in the text. JEL Classifications: M41; M42.

scholarly journals Faktor-Faktor yang Mempengaruhi Kewajiban Pengungkapan dalam Laporan Keuangan: Studi Empiris pada Perusahaan Pulp dan Kertas yang Terdaftar di BEI

2020 ◽  
Vol 5 (1) ◽  
pp. 60-78
Author(s):  
Fidiatur Fitrifiani ◽  
Ridwan
Keyword(s):  
Hypothesis Test ◽  
Financial Statements ◽  
Annual Reports ◽  
Mandatory Disclosure ◽  
Financial Reports ◽  
Positive Direction ◽  
Share Ownership ◽  
Analysis Technique ◽  
Negative Effect ◽  
Public Share

This study objectives to determine the factors that affect mandatory disclosure in the financial statements consisting of leverage, liquidity, profitability, public share ownership, and company status. The data used in this study are secondary in the form of financial reports and annual reports. The number of companies studied was eight companies in 2013-2017 and the number of samples is counted to 40 observations. The sampling method used in this study was purposive sampling using certain criteria. The analysis technique used is panel data regression analysis, estimation test for model selection, classic assumption test with a hypothesis test. The results of the research analysis showed that partial leverage, liquidity, profitability, and public share ownership had no significant and negative effect on mandatory disclosure in the financial statements while company status did not have a significant effect but had a positive direction mandatory disclosure in the financial statement.

scholarly journals PENGARUH KETEPATAN WAKTU PENYAMPAIAN LAPORAN KEUANGAN, KELEMAHAN SISTEM PENGENDALIAN INTERNAL, KEPATUHAN PERATURAN PERUNDANG-UNDANGAN, STATUS DAERAH DAN UKURAN DAERAH TERHADAP OPINI LAPORAN KEUANGAN PEMERINTAH DAERAH DI PULAU JAWA TAHUN 2013

2017 ◽  
Vol 3 (2) ◽  
pp. 99
Author(s):  
Samsul Rosadi ◽  
Yudi Siyamto ◽  
Helti Nur Aisyiah
Keyword(s):  
Local Government ◽  
Financial Reporting ◽  
Internal Control ◽  
Sampling Technique ◽  
Financial Statements ◽  
Financial Reports ◽  
Internal Control System ◽  
Negative Effect ◽  
The City ◽  
Timely Delivery

This study aims to examine the effect of timely delivery of financial statements, weaknesses of internal control systems, compliance with statutory regulations, regional status and size of the region on the opinion of local government financial reports on the island of Java. By using LKPD 110 the city / regency government in Java Island. Sampling technique is purposive sampling, that is how to determine sample by using certain criterion. Hypothesis testing techniques using logistic regression analysis. The results of this study indicate that the variable timeliness of financial reporting, weakness of the internal control system, compliance with legislation has a negative effect on the opinion of local government financial statements. While the variables of regional status and size of the regions have no effect on the opinion of local government financial statements.

Assurance on XBRL for Financial Reporting

2008 ◽  
Vol 22 (3) ◽  
pp. 353-368 ◽  
Author(s):  
R. David Plumlee ◽  
Marlene A. Plumlee
Keyword(s):  
Financial Reporting ◽  
Academic Research ◽  
Financial Statements ◽  
Securities And Exchange Commission ◽  
Financial Information ◽  
The Public ◽  
Business Reporting ◽  
Paper Version ◽  
Public Company ◽  
Reporting Environment

SYNOPSIS: Since 2004, the Securities and Exchange Commission (SEC) has taken steps toward requiring eXtensible Business Reporting Language (XBRL) to be used in its filings, including a voluntary filing program. “Tagging” financial information using XBRL creates documents that are computer readable and searchable. Once XBRL is required, investors are likely to demand assurance on the tagging process. The Public Company Accounting Oversight Board (PCAOB) has issued guidance on attest engagements regarding XBRL financial information furnished under the SEC’s current voluntary filer program, which relies on the auditor “agreeing” a paper version of the XBRL-related documents to the information in the official EDGAR filing. This approach may be adequate for the current paper-oriented reporting paradigm. However, once filing in XBRL becomes required, the power of XBRL to allow individual financial datum to be extracted from the SEC’s financial database will be realized. This “data-centric” idea is a crucial extension of the traditional reporting paradigm that will alter the way financial and nonfinancial data can be used. The current audit focus on reconciling only the XBRL output with the paper submissions does not address this paradigm shift. In this commentary, we discuss the SEC’s efforts to incorporate XBRL into its filing process and provide a brief overview of the technical aspects of XBRL. The commentary’s principal focus is on several important questions that assurance guidance must address in a data-centric reporting environment, such as, what constitutes an error, or what does materiality mean when individual pieces of financial data will be used outside the context of the financial statements? It also describes some XBRL-related areas where academic research can help guide XBRL-document assurance efforts.

Indigenous reporting of a national housing corporation

2018 ◽  
Vol 36 (2) ◽  
pp. 221-233 ◽  
Author(s):  
Alistair Brown
Keyword(s):  
Papua New Guinea ◽  
Financial Reporting ◽  
Local Level ◽  
New Guinea ◽  
Financial Statements ◽  
Financial Reports ◽  
Content Type ◽  
Housing Corporation ◽  
Regulatory Instruments ◽  
National Housing

Purpose The purpose of this paper is to assess the level of reporting compliance achieved by the National Housing Corporation (NHC) of Papua New Guinea in terms of local indigenous reporting expectations. Design/methodology/approach Testing of a framework of indigenous accountability through indigenous enactments and regulations is conducted by textual analysis, which is informed by the theory of indigenous alternatives to assess the financial reporting compliance of the NHC of Papua New Guinea’s financial statements for years ending 2004-2013. Findings Documentary evidence of the state auditor reports of the NHC’s financial statements reveals that the corporation’s financial reports are not submitted for audit on a timely basis and receive disclaimed audit opinions. Despite the clear indigenous reporting expectations raised by local legislative and regulatory instruments, the NHC is unable or unwilling to provide an accurate account of their activities. Practical implications The lack of compliant reporting suggests that the planning, management and monitoring of the housing needs of residents of Papua New Guinea are compromised. There also appears merit in asking why parliament continues to fund the corporation given its difficulties in meeting local-level reporting expectations. Social implications The results have wider implications for the reporting ideologies of indigenous-run housing corporations operating in other developing countries. It might be fruitful to meet local reporting expectations before taking on the specialized reporting that accompanies introduced western-oriented policies on housing. Originality/value Accountability in relation to indigenous property management is constructed through a lens of reporting issues facing a developing country housing corporation.

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