How to Enhance the Credibility of Audited Financial

Report
How XBRL Will Enhance the
Credibility of Financial
Statements
Presented by Graham Ward
President, IFAC
The Corporate Reporting Supply Chain
Management
Directors
Lawyers/Bankers
Auditors
Information
Distributors
Analysts
Investors
&
Regulators
Economics of Credibility
 Public values timely, accurate, complete userfriendly data
 Value = Reduction of uncertainty times $$$ at risk
 Increased transparency and greater usability of
corporate reporting information improves
credibility
 Increased credibility leads to further investment
and economic development
Information Cost and Value Equation
 Value = Reduction of uncertainty times $$$ at risk
 Cost = Produce + Structure + Distribute + Consume
XBRL provides a powerful ROI as it puts information
in the hands of consumers at lower costs (both
production and consumption)
The Current Environment
 Accelerating drive to enhance business reporting
 Increasing demands for more timely information
 Market requires increased transparency
XBRL - The Path to Progress
 Lowers the cost of information production AND
consumption
 Facilitates exchange of data
 Streamlines communications
 Expedites information delivery
 Enhances transparency of reported information
XBRL Supports the Public Interest
 XBRL – a tool which allows investors to better
protect themselves
 Level playing field for all investors
 Enhanced investor processing of information
 Easier investor analysis
 More informed market
 Better decisions
The Corporate Reporting Supply Chain
Effect on Internal Management Processes
 More timely, accurate, data for decisions
 Enhanced analytical capabilities
 Better control environment
 Accelerated adoption of reporting models
 Reduced costs for producing reports
 Enhanced flexibility of information for analysis
The Corporate Reporting Supply Chain
Effect on External Management Processes
 Reduces cost of producing reports in all formats
 Flexibility to meet individual circumstances
 Greater control over reported information
 Enhanced compliance capabilities
 Tell your own story (precise & clear)
The Corporate Reporting Supply Chain
Effect on External Auditors
 More timely, accurate, and complete data for
analysis
 More effective analysis of data for anomalies
 More frequent assessments
 Enables more efficient research
 More effective way of identifying reporting
changes and/or relationship with other standards
The Corporate Reporting Supply Chain
Effect on Regulators
 Enhanced validation of reported information
 Greater flexibility for changes in reporting
requirements
 Enables more complete analysis
 Meet regulator demand for more frequent and
detailed reporting
The Corporate Reporting Supply Chain
Effect on Stock Exchanges and Credit Agencies
 Better information for better analysis & decisions
 Easier analysis of reported and credit information
 More transparency and increased trading
 More useful information across borders
The Corporate Reporting Supply Chain
Effect on Stock Exchanges
 More timely collection of data
 Reduced costs of compliance
Challenges to Auditors
 Development of relevant assurance & attest
standards for reports formatted in XBRL
 Development of an enhanced business reporting
framework
 Leverage tools which exploit XBRL (and other
relevant Internet standards)
 Cost effective assessment of corporate reporting
process controls environment
Challenges to Auditors
 Assessment of management assertions
 Assessment of plaintiff risk associated with
enhanced analytical capabilities
 Process associated with electronic signatures
 Assessment of assurance services around more
frequent to continuous reporting
Benefits Outweigh Risks
 Cost-efficiencies for all in the financial reporting
supply chain
 Greater ability to extract and manipulate relevant
data
 Reduction in errors
 Increased transparency of reported information
Current Progress
 Prominent companies and organizations use
XBRL for publishing business information
 Software vendors are delivering XBRL enabled
application to the market around the world
 Regulatory bodies in Australia, China, Denmark,
Germany, Japan, Korea, Netherlands, UK and US
are implementing XBRL
 Governments in Singapore and New Zealand are
expected to endorse XBRL
The Corporate Reporting Supply Chain
Processes
Business
Operations
Internal
Financi
al
Reporti
ng
External
Financia
l
Reportin
g
Financial
Publishers
and Data
Aggregators
Companies
Participants
Trading
Partners
Management
Accountants
Investme
nt,
Lending,
Regulatio
n
Auditors
Software Vendors
Economic
Policymak
ing
Investors
Regulators
Central
Banks
Tomorrow’s World
 A more efficient / effective supply chain for the
capital markets
 Timely, accurate, user-friendly data valued by
public
 Increased usability of reported information
 Credible reporting process
 More efficient capital allocation
 More efficient investment and greater economic
development
How XBRL Will Enhance the
Credibility of Financial
Statements
Presented by Graham Ward
President, IFAC

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