APPLICATION OF XBRL IN AUDITING

Application of XBRL in Auditing

Application of XBRL in Auditing

Introduction

XBRL is an emerging technology supported by XBRL International (White, 2008); XBRL International consists of a worldwide consortium of companies, government entities, and organizations, numbering approximately 500, which have coordinated efforts to create an international standard for the reporting of business and financial information. Bergeron (2003) defined XBRL as follows: XBRL's definition from a business perspective is an open, platform-independent, international standard for the timely, accurate, efficient, and cost-effective electronic storage, manipulation, repurposing, and communication of financial and business reporting data. Committees working under various trade and international organizations set XBRL standards (Bergeron, 2003), a language for reporting financial data, with an agreed-upon principle of protocol. XBRL is an international standard because it involves financial organizations around the world. The American Institute of Certified Public Accountants (AICPA) is an organization involved with improving XBRL standards in the U.S. financial industry. Limiting XBRL to a single country is not advisable because in an environment of multinational companies, it would simply create another layer of complexity in financial and business reporting (Bergeron, 2003). The use of XBRL extends beyond financial reporting because it has its own set of special words that deal with business reporting. As an extension of XML, XBRL's vocabulary easily adapts to the changing needs of the finance industry and attaches an identifying tag for each item of data (“What is XBRL,” 2008). Tagging XBRL means that an element of the financial statement, for example, earnings per share (EPS), is tagged or marked, so that software programs recognize the element as EPS wherever it appears in the company's financial reporting. Tag elements in XBRL format can increase the speed of handling financial data, allow automatic checking of information, reduce the chance of error, and minimize the cost of manual reposting for comparison. Using the XBRL format, those handling financial transactions can analyze data rapidly and efficiently. XBRL can handle data in several languages and in compliance with different accounting standards. European countries use the XBRL format for a specific purpose, namely, as an international standard for communicating corporate financial and performance data. A subset of the XML document markup language, XBRL is an open specification that defines data over the Web. White (2008) stated, “The core specification, XBRL Specification 2.1, define the rules and syntax for XBRL and for XBRL taxonomies” (p. 3). White suggested that standardization is one major benefit of adopting XBRL for presenting accounting and financial information.

Auditing and XBRL

For an accountant, to audit the XBRL environment is one of the great responsibility, because he/she must focus on validating all data to be reported, taking over the risks of online information accessible to more users.

In this regard, the XBRL Web site, says it will be key to reach an agreement, through international organizations, on new audit procedures, that must be carried out to validate all the information developed by the XBRL. Similarly important is the consistent implementation of mechanisms to limit or prevent large extent ...