Questions are now being raised on whether auditors should
provide assurance on eXtensible Business Reporting Language (XBRL)
tagging as the US Securities and Exchange Commission (SEC) moves a
step closer to introducing the electronic taxonomy-based reporting
system in its jurisdiction.
The US securities regulator will propose that about 500 large
companies that report under US GAAP and have a worldwide public
float of more than $5 billion would be required to tag their
financial statements using XBRL for fiscal periods ending in late
2008. XBRL would be phased in for the remaining SEC-listed
companies using US GAAP within the following two years, while
SEC-listed companies using IFRS would be required to use XBRL for
fiscal periods ending in late 2010.
BDO Seidman national director of accounting Ben Neuhausen told
the International Accounting Bulletin that such a move
could have a dramatic impact on the profession if auditors are
required to audit or provide some form of assurance on the XBRL
tagging of information.
“Starting out there is no such requirement, but there has
certainly been talk that somewhere down the road investors would
like the assurance that companies did tag the numbers correctly,”
Neuhausen said, adding that such assurance would create additional
work for auditors.
The scale of the impact will depend on the level of assurance
ultimately required, Neuhausen said.
“If the auditors are asked to give some assurance on the XBRL
tag numbering, then would it still be the same overall framework
that it is in relation to the financial statements taken as a
whole, or would it focus on each individual tag?,” he asked.
An immediate impact for professional services firms will be that
clients will seek help to understand XBRL rules and help in the
first time implementation, Neuhausen said.
A recent study by Grant Thornton US, which surveyed chief
financial officers and senior comptrollers across the US, found
that only 55 percent of respondents were familiar with XBRL.
On the release of the survey, Grant Thornton said the findings
identified an experience gap that will pose a challenge for the SEC
as it phases in the adoption of XBRL by issuers.