Providing Assurance on XBRL Instance Documents of Financial Information October 24, 2003 Paul Penler, Ernst & Young Global XBRL Leader AICPA XBRL Implementation Task Force – Chair International Conference on XBRL: Current Issues and Future Directions

Agenda  Why Now?  Why is Assurance Important?  Specifics of AT 101 Interpretation 2

Why Now?  Since the inception of XBRL in 1999, it has been perceived that the ability to provide third party assurance is required for the acceptance of XBRL reports in the market place.  We expect increased numbers of XBRL Instance Documents of audited financial statements in the market.  It is to the best interests of the market, and to auditors, that the profession provides guidance on this emerging challenge in a clear, consistent, effective and efficient manner – prior to the existence of thousands of XBRL Instance Documents of audited financial statements. 3

Emerging Use of XBRL  Several public companies have posted XBRL Instance Documents of their financial statements on their web sites – some have even submitted to regulators.  Several Banks are assessing or piloting solutions to have borrowers submit their financial statements in XBRL to Lenders.  Several regulatory agencies have already implemented XBRL,are implementing XBRL or are in the process of evaluating XBRL.  In a few years, XBRL may be the primary medium in which financial statements, and other financial reports, are submitted to Regulators and Banks. 4

Why is Assurance Important? To the Market: Users will want to obtain confidence that the electronic version of the financial statements are the same as the human readable version. To Assurance Providers: The ability to extend assurance on the financial statements to this new electronic medium is a reasonable evolution of the auditing profession. 5

Viewing a XBRL Instance Document PDF Viewed In Notepad - Example There has been some discussion as to the ‘requirement’ that an XBRL Instance Document needs to be ‘viewed’ through a piece of software. The viewing of an XBRL Instance Document (*.XML) through a software application, is very similair to viewing a finacnial statement in a PDF format in an Acrobat Viewer. Both.XML and.PDF files need a software application to be ‘fully comphrehendable. However, both could be viewed ‘raw’ in an application like Microsoft Notepad.

XBRL Assurance Questions Being Addressed  Do existing audit standards provide a framework for providing assurance on XBRL financial statements?  What is the recommended approach for providing assurance on XBRL financial statements in the short term?  What enhancements to existing standards are required to allow for a more robust XBRL assurance environment?  What is the recommended path forward to resolve the longer term assurance issues?

Business Requirements  The ‘original assurance’ on the audited financial statements ‘stays with’ the XBRL Instance Document  No distribution limitations on the report related to the XBRL Instance Document  The solution cannot be cost prohibitive  The Instance Document is incorporated as part of an overall client deliverable (e.g. annual report) that includes audited financial statements and report

Where we are today – ASB Sept 2003 “Attest Engagements,” of SSAE No. 10, Attestation Standards: Revision and Recodification, applies to engagements in which a CPA in the practice of public accounting is engaged to issue, or does issue, an examination, a review or an agreed-upon procedures report on subject matter, or an assertion about the subject matter, that is the responsibility of another party. Chapter one of SSAE No. 10 establishes a framework for attest engagements performed by practitioners and for the ongoing development of related standards. For certain subject matter (such as financial forecasts and projections, pro forma financial information, internal control over financial reporting, compliance attestation, and management’s discussion and analysis), specific attestation standards have been developed to provide additional requirements for engagement performance and reporting.

Attestation Standards - AT 101 Interpretation  CPAs can provide assurance today on company’s XBRL Financial Information  Criteria  Taxonomies  Technical Specification  Who performs audit?  Audited and Un-audited Information 10

Questions? Paul Penler, Principal, Ernst & Young AICPA XBRL Implementation Task Force – Chair