a relative cost framework for rethinking assurance of xbrl filings isais 2011: rome, italy glen l....
TRANSCRIPT
A Relative Cost Framework for
Rethinking Assurance of XBRL Filings
ISAIS 2011: Rome, Italy
Glen L. Gray, California State University, Northridge, USAMichael Alles, Rutgers Business School, USA
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Questions…• How much would you pay to insure your
old car with a value of $650?
• How much would you pay for a glass of wine at McDonald’s?
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History• 1969: Al Gore invents the Internet• 1999: IASB and FASB each publish reports
regarding Web-based financial reporting—Many search problems
• 1999: Charlie Hoffman invents XBRL• 2000: Various groups start exploring XBRL
assurance issues—XBRL Int., AICPA, CICA, PCAOB…
• 2009: SEC mandates phase in of XBRL filings—but does not require assurance
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Scoping Assurance Services• Srivastava & Kogan, 2010• Boritz & No, 2011
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Srivastava & Kogan Framework
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Boritz & No Framework
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Who/What Provides Assurance
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Costs: What will the market pay?• External cost relative to internal cost
– whether it costs less to obtain assurance internally vs. having ex-post assurance of XBRL filing as the external auditor may be tasked with doing
• External cost relative to preparation cost– extrapolating what happens if the cost of
preparing XBRL filings keeps falling while the cost of assuring those statements keeps rising
[Assumption: voluntary choices]
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Costs: Volunteer Filing Program1st
submission/ block-text
footnotes & schedules
Subsequent submission/
block-text footnotes & schedules
1st submission/
detailed footnotes & schedules
Subsequent submission/
detailed footnotes & schedules
Preparation face financials
$31,369(125 hours)
$4,312(17 hours)
$4,312 $4,312
Preparation footnotes
$1,750 $1,750 $25,000 $12,500
Preparation schedules
$250 $250 $2,500 $1,250
Software and filing agent services
$6,140 $6,140 $6,140 $6,140
Web site posting
$1,000 $1,000 $1,000 $1,000
Total cost $40,50
9$13,45
2$38,95
2$25,20
2
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Economically Feasible Space: Early Years
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Economically Feasible Space: Later Years
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Shifting Focus to Filing Agents• Volume, volume, volume• Converting fixed costs to variable costs• Shifting assurance from instance
documents to processes• SAS No. 70/ SSAE No. 16
Thank You!
Grazie Mille!
Glen L. Gray [[email protected]] Michael Alles [[email protected]]
Questions?