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XBRL, assurance & financial analysis

XBRL, assurance & financial analysis. Chris Dreyer, CFA WCOA 2006. monitoring iorp . eu. Overview. Who are “users”? What do they know (about XBRL)? Do they care (about audits)? Doing the sums So?. monitoring iorp . eu. Who are users?. monitoring iorp . eu. What do they know?.

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XBRL, assurance & financial analysis

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  1. XBRL, assurance & financial analysis • Chris Dreyer, CFA • WCOA 2006 monitoring iorp.eu

  2. Overview • Who are “users”? • What do they know (about XBRL)? • Do they care (about audits)? • Doing the sums • So? monitoring iorp.eu

  3. Who are users? monitoring iorp.eu

  4. What do they know? • Overall, very little • But those in the know like it • CFA Institute Member survey in March 2006 monitoring iorp.eu

  5. Do they care? • The market at large does not care deeply about audits - • As long as they are not limited! • Then it becomes a matter for specialists / litigators. • But specialists have a mind of their own about valuation. • Hence assurance is perceived to be binary. monitoring iorp.eu

  6. Doing the sums • Generally, if XBRL is disclosure neutral, then it should also be “audit neutral” at all levels: • statements • accounts • line items • There should be an assurance status tag to distinguish audited from not audited items. monitoring iorp.eu

  7. Doing the sums • Users will increasingly take individual items out of their contexts without seeing the context. • Users expect audited information to be of homogeneous quality throughout. • Reliable segment information will be a particular focus of XBRL based research. monitoring iorp.eu

  8. So? • XBRL will be a disruptive technology in financial reporting - if & when a majority of preparers adopt it. • Which I hope they will; with a little help from their regulators. • Sarbanes-Oxley’s procedural focus may have been just a few years too soon. monitoring iorp.eu

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