Background on Developments Related to XBRL & Assurance Amy Pawlicki Director – Business Reporting, Assurance & Advisory Services and XBRL AICPA

Agenda How will XBRL impact the financial reporting process as we know it? Common Errors Auditor Implications AICPA XBRL Assurance Task Force work in progress Questions & Discussion

How will XBRL impact the financial reporting process? Fundamental issues XBRL tagging is very different from turning a Word document into a pdf Tagging data is the equivalent of classifying data in company financial statements and footnotes Currently, tagging is supplementary to the traditional financial reporting process, and the accuracy of tagging is not covered by the traditional auditors report...

How will XBRL impact the financial reporting process? Example: Illustration of potential tagging risks Source balance sheet element: Accounts Receivable, net of allowance for doubtful accounts Definition: Trade receivables, net of allowance for doubtful accounts Tag chosen from the appropriate standard taxonomy: Receivables, Net, Current Definition: The total amount due to the entity within one year of the balance sheet date (or one operating cycle, if longer) from outside sources, including trade accounts receivable, notes and loans receivable, as well as any other types of receivables, net of allowances established for the purpose of reducing such receivables to an amount that approximates their net realizable value.

Research discovers errors in VFP Missing elements and amounts Incorrect amounts Sign flips Duplication of items Incorrect tagging Research conducted by NC State University, which examined 22 company XBRL submissions under the VFP and compared them to the related 10K filings

Common errors found in initial SEC Interactive Data filings Extensions made when elements already exist in standard list of tags Text block elements too broad Labels do not include the same text as html document (including information in parenthesis) Extensions for monetary items require assignment of debit/credit or definition, companies are not including New elements created with company-specific information in the element name Presented at SEC Public Seminar June 10, 2009

Auditor Implications The XBRL data that will be used by investors, regulators and others is not necessarily the same as the underlying, audited data In the US, SEC Rules do not require any auditor involvement regarding the submission of XBRL data, however issuers may voluntarily seek auditor involvement as they deem appropriate

AICPA XBRL Assurance Task Force work in progress Center for Audit Quality Alert on Potential Audit Firm Service Implications Raised by the SEC Final Rule on XBRL Statement of Position on Performing Agreed- Upon Procedures Engagements Consideration of issues related to evolution of examination guidance post-VFP

CAQ Alert on Potential Audit Firm Implications of SEC Rule on XBRL Potential services audit firms may be asked to provide: Advisory services Assurance services Agreed-upon procedures Examination of an assertion about XBRL-tagged data Examination of controls over the preparation of XBRL- tagged data AT 601, Compliance Attestation Review of an assertion about XBRL-tagged data Other considerations related to XBRL-tagged data: Effect of submission of XBRL-tagged data on the Independent Auditor’s Report Reference to other forms of reports

Company accepts responsibility for the subject matter and the assertion Sufficiency of procedures is determined by the company to meet its own needs Report is restricted use – not distributed beyond the company nor included or referred to in an SEC filing Report is a detailed description of procedures and findings only Time for engagement execution is relatively brief Cost may be managed based on defined scope Statement of Position on Agreed-Upon Procedures Engagements

Consideration of issues related to evolution of examination guidance Subject matter vs. management assertions Subject matter vs. criteria Materiality Scope Etc.

Questions and Discussion