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.

Does Recent Academic Research Support Changes to Audit Reporting Standards?

2016 ◽  
Vol 30 (2) ◽  
pp. 255-275 ◽  
Author(s):  
Jean Bédard ◽  
Paul Coram ◽  
Reza Espahbodi ◽  
Theodore J. Mock
Keyword(s):  
Financial Reporting ◽  
Academic Research ◽  
Financial Statements ◽  
Future Research ◽  
Research Support ◽  
The Public ◽  
Market Participants ◽  
Information Gap ◽  
Public Company ◽  
Reporting Process

SYNOPSIS The Public Company Accounting Oversight Board (PCAOB), the International Auditing and Assurance Standards Board (IAASB), and the U.K. Financial Reporting Council (FRC) have proposed or approved standards that significantly change the independent auditor's report. These initiatives require the auditor to make additional disclosures intended to close the information gap; that is, the gap between the information users desire and the information available through the audited financial statements, other corporate disclosures, and the auditor's report. They are also intended to improve the relevancy of the auditor's report. We augment prior academic research by providing standard setters with an updated synthesis of relevant research. More importantly, we provide an assessment of whether the changes are likely to close the information gap, which is important to financial market participants and other stakeholders in the audit reporting process. Also, we identify areas where there seems to be a lack of sufficient research. These results are of interest to all stakeholders in the audit reporting process, as the changes to the auditor's report are fundamental. Additionally, our summaries of research on the auditor's report highlight where there is limited research or inconsistent results, which will help academics identify important opportunities for future research.

scholarly journals Issuance Of Subsidiary Stock As An Earnings Management Strategy

2011 ◽  
Vol 21 (1) ◽  
Author(s):  
Susan Perry Williams ◽  
Thomas H. Williams
Keyword(s):  
Earnings Management ◽  
Financial Reporting ◽  
Management Strategies ◽  
Academic Research ◽  
Financial Statements ◽  
Research Literature ◽  
Securities And Exchange Commission ◽  
Net Income ◽  
Earnings Expectations ◽  
Income Statement

<p class="MsoNormal" style="text-align: justify; margin: 0in 0.5in 0pt; tab-stops: 1.0in 1.5in 2.0in 2.5in 3.0in 3.5in 4.0in 4.5in 5.0in 5.5in 6.0in;"><span style="font-family: Times New Roman; font-size: x-small;">Arthur Levitt, chairman of the Securities and Exchange Commission, expressed concern that the pervasiveness of earnings management in American corporate financial statements threatens the integrity of financial reporting.<span style="mso-spacerun: yes;">&nbsp; </span>Levitt referred to the &ldquo;cookie jar&rdquo; phenomenon wherein U.S. firms have earmarked opportunities to &ldquo;find gains&rdquo; when earnings are less than anticipated.<span style="mso-spacerun: yes;">&nbsp; </span>The academic research literature includes a large number of studies on earnings management strategies.<span style="mso-spacerun: yes;">&nbsp; </span>One relatively unexplored strategy is the use of stock issuances by subsidiaries to generate gains under the provisions of SEC Staff Accounting Bulletin No. 51.<span style="mso-spacerun: yes;">&nbsp; </span>Based upon a sample of 125 observations of this accounting choice over the period 1985 through 1997, our study provides compelling evidence that recognition of gains on the issuance of subsidiary stock coincides with periods when earnings fail to meet expectations (as measured by analysts&rsquo; forecasts), and that the recognition of these gains in the income statement is effective in achieving earnings expectations. Further, the amounts of these gains are large relative to pre-gain net income</span></p>

scholarly journals РОЗКРИТТЯ НЕФІНАНСОВОЇ ІНФОРМАЦІЇ В ЗВІТНОСТІ ПІДПРИЄМСТВ МАЛОГО БІЗНЕСУ

2020 ◽  
pp. 174-182
Author(s):  
Tetyana Gogol ◽  
Vadym Kolotok
Keyword(s):  
Small Business ◽  
Financial Reporting ◽  
Local Governments ◽  
Labor Relations ◽  
Accounting Standards ◽  
Environmental Issues ◽  
Financial Statements ◽  
Financial Information ◽  
Business Reporting ◽  
Do So

The article substantiates the importance of displaying non-financial information to external and internal users of small business reporting and also proves the need to disclose information on human rights and labor relations, anti-corruption activities, interaction with local governments, environmental issues and so on. Accounting standards governing the formation of various types of non-financial statements have been analyzed, together with the indicators which are further disclosed in such reports in order to confirm analytical information. The types of non-financial reporting constituting Ukrainian enterprises have been considered, the composition of indicators appropriate for disclosing to small business enterprises, which are already submitting reports or planning to do so in the future, have been justified.

scholarly journals Auditing Subsequent Events: Perspectives from the Field

2014 ◽  
Vol 8 (2) ◽  
pp. A10-A24 ◽  
Author(s):  
David N. Herda ◽  
James J. Lavelle
Keyword(s):  
Academic Research ◽  
Research Synthesis ◽  
Securities And Exchange Commission ◽  
The Public ◽  
Public Company ◽  
Research Questions

SUMMARY: A research synthesis team formed by the Auditing Section of the American Accounting Association recently authored a paper (Chung et al. 2013) addressing the audit of subsequent events (SEs). The audit of SEs is a difficult audit area, as approximately one-third of the Public Company Accounting Oversight Board's inspection reports and numerous Securities and Exchange Commission enforcement releases identify deficiencies in this area (Chung et al. 2013). Chung et al. (2013) developed a model and proposed a series of research questions encouraging future academic research in this area. In this paper, we address several of these questions by surveying 76 practicing auditors. We summarize the auditors' responses and present recommendations that may be useful in improving audits of SEs.

The Effects of Critical Audit Matter Paragraphs and Accounting Standard Precision on Auditor Liability

2016 ◽  
Vol 91 (6) ◽  
pp. 1629-1646 ◽  
Author(s):  
Christine Gimbar ◽  
Bowe Hansen ◽  
Michael E. Ozlanski
Keyword(s):  
Financial Reporting ◽  
Accounting Standards ◽  
Securities And Exchange Commission ◽  
Accounting Standard ◽  
Generally Accepted Accounting Principles ◽  
Auditor Liability ◽  
The Public ◽  
Regulatory Changes ◽  
Public Company ◽  
Standard Precision

ABSTRACT The Public Company Accounting Oversight Board recently proposed amendments to the standard audit report that would require the disclosure of critical audit matters (CAMs), and the Securities and Exchange Commission continues to evaluate the use of principles-based (imprecise) accounting standards within U.S. generally accepted accounting principles. We assert that jurors perceive precise accounting standards to constrain auditors' control over financial reporting outcomes, resulting in a lower propensity for negligence verdicts when the accounting treatment conforms to the precise standard. However, we hypothesize that the use of either imprecise standards or CAMs reduces the extent to which jurors perceive this constraint to exist, leading to increased auditor liability. We present experimental evidence supporting this argument. Our results highlight the similarities between the effects of imprecise accounting standards and CAMs on negligence assessments. These results provide insight for regulators and the auditing profession about the potential consequences of the proposed regulatory changes.

scholarly journals Privately-Held Companies: Legislation, Regulation, and Limited Dissemination of Financial Information

2019 ◽  
Vol 47 (4) ◽  
pp. 28
Author(s):  
Zoeanna Mayhook
Keyword(s):  
Financial Statements ◽  
Securities And Exchange Commission ◽  
Financial Information ◽  
Publicly Traded ◽  
Private Companies ◽  
Public And Private ◽  
Publicly Traded Companies ◽  
The Public ◽  
Disclosure Requirements ◽  
Privately Held

Publicly-traded companies have reporting and disclosure requirements set by the U.S. Securities and Exchange Commission (SEC), which includes the public disclosure of financial statements and an annual 10-K report. In contrast, privately-held companies most often do not meet the SEC filing requirements, and therefore, are not required to disclose financial information. For investors and business researchers, this can provide clear challenges for researching privately-held companies. This paper first highlights a sample of the significant legislation and rules affecting disclosure requirements of public and private companies. Then, it offers other government sources for company and industry financial information. Finally, it suggests further resources to educate business owners, investors, and business researchers.

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 PELAPORAN INFORMASI KEUANGAN MENURUT SEGMEN

2016 ◽  
Vol 4 (2) ◽  
pp. 78
Author(s):  
Akhmad Riduwan
Keyword(s):  
Financial Reporting ◽  
Complete Information ◽  
Financial Statements ◽  
Financial Information ◽  
Financial Statement ◽  
Consolidated Financial Statements ◽  
Growth Trend ◽  
Financial Reports ◽  
Financial Report ◽  
Public Company

Consolidated financial statements does not wholly provide complete information of the company’s activities with many segments. To meet the need of the financial statement users, it is necessary to expose the segmental financial information. The main objective of the exposure of the segmental financial information is to provide information for the users about relativity scale, profit contribution and the growth trend of each company’s segments to enable the financial reports users to better evaluate the company as a whole. The preparation procedure of the segmental financial statement is provided in PSAK No.5. Segmental financial reporting is a must for the ging-public company. However, this segmental report does not preclude the whole consolidated financial statement, because a segmental repot is merely complimentary to make consolidated financial report more informative.

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.

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