The Current State of XBRL Reporting

PILONGO, MARIA VHENA V.

BSA 4-13

October 2005• US Banking

regulators have required quarterly “call reports” to be filed in XBRL

April 2005• The SEC began a

voluntary financial reporting program that allows registrants to supplement their required filings with exhibits using XBRL

September 2006• The SEC

announced its new electronic reporting system to receive XBRL filings called IDEA (Interactive Data Electronic Application)

May 2008• The SEC issued

rules requiring large publicly held companies to adopt XBRL by December 15 to meet financial reporting requirements

XBRL – Reengineering FinancialReporting

The Current State of XBRL Reporting

• Comparable developments to encourage or require XBRL have taken place internationally.

• Since early 2003, the Tokyo Stock Exchange has accepted XBRL information.

• In 2007, the Canadian Securities Administrators (CSA) established a voluntary program to help the Canadian marketplace gain practical knowledge in preparing, filing, and using XBRL information. Regulators in China, Spain, the Netherlands, and the United Kingdom are requiring certain companies to use XBRL.

• In addition, the use of XBRL will facilitate fulfillment of legal requirements stipulated in the Sarbanes-Oxley Act, which was passed in response to widespread concern and skepticism about financial-reporting standards. In particular, XBRL can play a role in facilitating earlier reporting of financial statements required under SOX legislation.

CONTROLLING THE FRS

Potential Risks to the FRS

A defective audit trail

Unauthorized access to the

general ledger

GL accounts that are out of balance

with subsidiary accounts

Incorrect GL account balances because of

unauthorized or incorrect journal

vouchers

Controlling the FRS

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COSO framework for control activities

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COSO framework for control activities

Transaction Authorization

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COSO framework for control activities

Transaction Authorization

.. more

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COSO Internal Control Issues

• Transaction Authorization• Segregation of Duties• Access Controls• Accounting Records• Independent Verification

INTERNAL CONTROL IMPLICATIONS OF XBRL

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Taxonomy Creation

Taxonomy Mapping Error

Validation of Instance Documents

Controlling the FRSInternal Control Implications of XBRL

Internal Control Implications of XBRL• Taxonomy Creation. Taxonomy may be generated incorrectly, which

results in an incorrect mapping between data and taxonomy elements that could result in material misrepresentation of financial data.

• Taxonomy Mapping Error. The process of mapping the internal database accounts to the taxonomy tags needs to be controlled.

• Validation of Instance Documents. As noted, once the mapping is complete and tags have been stored in the internal database, XBRL instance documents (reports) can be generated.

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