This document discusses how assurance can be provided on financial information posted on websites in XBRL format. It introduces eXtensible Assurance Reporting Language (XARL) which allows assurance to be provided on XBRL documents. XARL contains elements like assurance date and auditor signature. Continuous auditing improves integrity of web-based financials by performing ongoing substantive testing. While XBRL assurance represents opportunities for auditors, it also poses risks if unaudited information is associated with auditors. Users demand greater assurance on non-financial statement information online.

1. How Can You Obtain Assurance
Around Financial Information
Posted on a Website?
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2. eXtensible Business Reporting Language
Benefits
• Allows users to prepare, publish, and exchange financial
information over the Internet
• Simplifies the process of extracting and analyzing
financial data
Limitations
• Vulnerable to interception and manipulation
• Unable to communicate the reliability of financial
statements and system controls
2

3. eXtensible Assurance Reporting Language
Objectives
• Enables assurance to be provided on XBRL documents
• Reduces users’ concern over the creditability of XBRL
documents
XARL Taxonomy
• Contains elements including assurance type, assurance
date, auditor’s digital signature, and system reliability
• Describes how assurance data within the template are
interrelated
• Allows consistency to be achieved in all XARL
documents 3

4. eXtensible Assurance Reporting Language
Uses
• Tests the assertion of whether financial statements
conform with GAAP
• Asserts the financial information contained in XBRL
documents
• Provides assurance on the specific taxonomy used to
generate XBRL content
Levels of Assurance
• Information-level: conveys integrity at the financial
statements level
• Document-level: asserts the integrity in XBRL documents
4

5. Continuous Auditing
Uses
• Improves the integrity of web-based financial information
• Decreases the information asymmetry between a
company and its stakeholders
Conceptual Framework
• Involves a set of event-driven components, called the
external continuous audit machine (ECAM)
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6. Continuous Auditing – ECAM
Functions of ECAM
• Detects system control configurations through an online
control testing methodology
• Uses testing results to determine nature, timing and
extent of substantive tests
• Performs online substantive testing on a transaction
basis
• Summarizes testing results and issues audit report
6

7. Assurance on XBRL Filing – Viewpoints
Public Company Accounting Oversight Board (PCAOB)
• Issued guidance on assurance engagements regarding
XBRL
• Emphasizes the comparison of the human readable
version of XBRL documents to those filed to the SEC
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8. Assurance on XBRL Filing – Viewpoints
International Federation of Accountants (IFAC)
• Aims to develop a common set of standards for auditing
XBRL documents
• Step 1: Ensure an appropriate taxonomy is used
• Step 2: Ensure source data is reliable and
extensions/customizations of the taxonomy are complete
and accurate
• Step 3: Confirm that existing internal controls can ensure
the completeness, accuracy, and timeliness of XBRL
documents
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9. Assurance on XBRL Filing – Viewpoints
American Institute of CPAs
• Developed a set of principles and criteria for the
evaluation of XBRL documents
• Four principles: Completeness, mapping, accuracy, and
structure of information
• 24 specific criteria under each of the principles that
preparers, reviewers, and practitioners should follow
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10. Impact on the Accounting Profession
Opportunities
• Assurance on website content represents new business
opportunities for auditors
Risks
• Responsibility around unaudited information
• Association with false or incomplete information
• Inappropriate omission of the audit report
10

11. Impact on the Accounting Profession
Roles for External Auditors in XBRL Filings
• Less than a quarter of XBRL filers employed audit firms in
their filing process
• External assurance provider is not management’s only
source to obtain confidence in XBRL filings
• Focus of XBRL assurance procedures will move from
translation to the process used in preparing the documents
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12. Impact on the Financial Statement Users
• Unaudited financial information posted on websites creates
an expectations gap between user and auditor
• Non-professionals are less likely to correctly identify which
10-K components are audited
• Investors in both professional and non-professional groups
falsely believe some information is audited when in fact not
• Investors heavily rely on auditors to verify the accuracy of
information presented by management
• Users demand greater assurance on information outside of
the financial statements
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13. Impact on Executives
Requirements from Accounting Bodies
• Many accounting bodies including the IFAC ascribe the
reporting entity with the responsibility for the integrity,
electronic presentation, and maintenance of financial
information
• IFAC recommends companies to publish a detailed policy
regarding its use of Internet financial reporting
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14. Impact on Executives
Quality Control and Impact on Company Reputation
• Pressure to meet quality threshold because filing errors
get reported on online analysis websites
• Need to obtain a high level of confidence in the accuracy
of XBRL filings
• Filings that contain material misstatements would incur
reputational cost to the company
• Risk of creditability loss in the financial statements itself
• Demand for external assurance services expected to
increase after the two-year “safe harbour” period
14

15. Current Issues
Auditor Involvement with Information outside Audited
Financial Statements
• PCAOB is considering changes to the auditor’s report
• The initiative will clarify auditor’s involvement with
information outside the audited financial statements
• Changes would increase users’ understanding of
limitations of audit procedures, and help them identify
unaudited 10-K components
15

16. Current Issues
Cost Concern in Relation to Demand for External Audit
Services
• Cost-benefit trade-off
• Assurance service will decrease risk of
litigation/reputational damage
Mandate for Assurance on XBRL Filings
• SEC implies that external assurance on XBRL filings may
be required
• Also emphasizes that evaluation is separate from
preparation and submission of filings
• Inconsistency in SEC’s position 16

17. THANK YOU!
For additional inquiry, contact michelle.sy.ye@gmail.com
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