how xbrl will enhance the credibility of financial statements presented by graham ward president,...
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How XBRL Will Enhance the Credibility of Financial
Statements
Presented by Graham Ward
President, IFAC
The Corporate Reporting Supply Chain
Auditors AnalystsInformationDistributorsDirectorsManagement
Investors& Regulators
Lawyers/Bankers
Economics of Credibility
Public values timely, accurate, complete user-friendly 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 informationin 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
ExternalFinancialReporting
BusinessOperations
InternalFinancialReporting
Investment,Lending,
RegulationProcesses Economic
Policymaking
Participants
AuditorsTradingPartners
Investors
FinancialPublishersand Data
Aggregators
Regulators
Software Vendors
ManagementAccountants
Companies CentralBanks
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