Automatic Rendering Tool and Digital Audit Process Innovation

Nov 2005

YongMoon Lee

KICPA & AICPA

• Automatic Rendering Tools

Table of Contents

• Digital Audit Process Innovation

• XBRL Adoption Plan By Financial Supervisory Service of Korea

Automatic Rendering Tools

Taxonomy and Instance Document Overview

Consideration For XBRL Instance Document

Screen Shot

Benefits expected

Taxonomy Framework For Audit Report

AccountantsReport(krfr-ar)

Primary TermsElements(krfr-pte)

Primary TermsRelationships

(krfr-ptr)

Commercial &Industrial

(kr-gaap-ci)

CommanyExtensionTaxonomy

Instance Documents Audit Report File

MS Word File

Consideration For XBRL Instance Document

Responsibility

Financial Statement Client or Entity

Audit Opinion Auditor

Consideration For XBRL Instance Document

Responsibility

Financial Statement Client or Entity

Audit Opinion Auditor

Need two versions ofXBRL editor

Digital Audit Process innovation

Page 7IBcenter

XBRL FS Editor

Financial Statement

of Position

Income Statement

Statement of Appropriation

of Retained Earnings

Cash Flow Statement

Notes

Auditor’s

Opinion

XBRL Audit Report

Preparer’s Responsibilty Auditor’s Responsibilty

XBRL Editor Screen Shot

XBRL Editor with Audit Report Rendering Screen Shot

MS-Word FIle

Benefits Expected

Automation of word processing which can import xbrl instance document

It can be used for sending the xbrl document after completion

It can attract CPA’s interest and can save time and money

It can reduce errors in typing and calculation

Digital Audit Process Innovation

Current Process

To Be Model

XBRL GL

Benefits expected

Considerations

Digital Audit Process innovation

Page 12IBcenter

Current Process

Leadsheet,

W/P

Adjustment

T/B After Adjustment

Trial Balance,

Finacial Statement

Manual Input By Auditor

Audit Program/

Check List

F/S With Auditor’s

Opinion

Dart Input

(SGML)

Manual Input

Inspection,Sampling,

Confirmation,Calculation,Support byAudit tools

Digital Audit Process innovation

Page 13IBcenter

To Be Process (Web Based)

Leadsheet,

W/P

Adjustment

T/B After Adjustment

Trial Balance,

Finacial Statement

Audit Program/

Check List

F/S With Auditor’s

Opinion

Dart Input

(XBRL)

Automatic Input

Inspection,Sampling,

Confirmation,Calculation,Support byAudit tools(*)Cretop

XBRL GL

(*)Cretop which is on-line service of credit information can be used for the valuation of Receivable

Audit Process Automation

XBRL GL

Audit Working PaperAudit Working PaperChart of AccountsEntriesAging

Trial BalanceGL

InventoryOpen APOpen AR

Sampling Confirmation Calculation

Reporting

ERP Legacy SYS

XBRL GL Characteristics

Reporting Independent

System Independent

Consolidation

Flexibility

Complements XBRL for financial reporting

It collects general ledger and after-the-fact receivables, payables, inventory and other non-financial facts, and then permits the representation of that information using traditional summariesand through flexible links to XBRL for reporting.

XBRL GL Characteristics - Reporting Independent

Source : http://www.wbrl.org/GLTaxonomy/

Any developer can create import and export routinesto convert information to XBRL GL format. This means that accounting software developers need only consider one design for their XML import/export file formats. Application service providers can offer to supply XBRL import and output so end-users can more easily use their own data. Companies developing operational products, such as point of sale systems or job costing, or reporting tools can link with many accounting products without needing specialised links to each one.

XBRL GL Characteristics - System Independent

Source : http://www.wbrl.org/GLTaxonomy/

ERP And Auditing

SAP OracleIBC PeopleSoft

……

……

Audit Audit

Audit

Audit

disparate accounting systems

Separate auditing efforts

Current Situation

XBRL GL and ERP

SAP OracleIBC PeopleSoft

……

……

XBRL GL Instance

Auditing

Systems independent

ERP Vendors

XBRL GL Taxonomy

Popular low-end products and mid-market solutions are not designed to facilitate consolidating data from multiple organisations. 

XBRL GL can help transfer the general ledgerfrom one system to another, be used to combine the operations of multiple organisations, or bring data into tools that will do the consolidation.

XBRL GL Characteristics - Consolidation

Source : http://www.wbrl.org/GLTaxonomy/

XBRL GL provides flexibility, overcoming the limitations of other approaches such as Electronic Data Interchange (EDI).  It offers an extensible, flexible, multi-national solution that can exchange the data required by internal finance, accountants, and creditors.

XBRL GL Characteristics - Flexibility

Source : http://www.wbrl.org/GLTaxonomy/

XBRL GL Characteristics – Complements XBRL FR

Source : http://www.wbrl.org/GLTaxonomy/

It complements XBRL for financial reporting, linking financial reports to the detail behind them, providing all the specific information required for audit workpapers, budget planning, and detailed reporting.

XBRL Chart Of Accounts

<gl-cor:accountMainID><gl-cor:xbrlElement>

XBRL FR Instance Doc

<krfr-pte:OperatingRevenue>

XBRL GL Instance Doc

<gl-cor:accountMainID>

XBRL FR and XBRL GL Relationship

<gl-cor:entryHeader> <gl-cor:enteredBy contextRef="now">YongMoon Lee</gl-cor:enteredBy> <gl-cor:enteredDate contextRef="now">2005-12-01</gl-cor:enteredDate> <gl-cor:sourceJournalID contextRef="now">Junpyo</gl-cor:sourceJournalID> <gl-cor:entryNumber contextRef="now">10</gl-cor:entryNumber> <gl-cor:entryType contextRef="now">standard</gl-cor:entryType> <gl-cor:entryComment contextRef="now">The comment for this entry</gl-cor:entryComment> <gl-bus:sourceJournalDescription contextRef="now">JE</gl-bus:sourceJournalDescription>

<gl-cor:entryDetail> <gl-cor:lineNumber contextRef="now">1</gl-cor:lineNumber> <gl-cor:account>

<gl-cor:accountMainID contextRef="now">10100</gl-cor:accountMainID> <gl-cor:accountMainDescription contextRef="now">Rent</gl-cor:accountMainDescription> <gl-cor:accountPurposeCode contextRef="now">koreangaap</gl-cor:accountPurposeCode> <gl-cor:accountType contextRef="now">account</gl-cor:accountType>

</gl-cor:account> <gl-cor:debitCreditCode contextRef="now">D</gl-cor:debitCreditCode> <gl-cor:amount contextRef="now" decimals="2" unitRef="usd">50000</gl-cor:amount> <gl-cor:postingDate contextRef="now">2005-11-08</gl-cor:postingDate> <gl-cor:identifierReference>

<gl-cor:identifierCode contextRef="now">1141</gl-cor:identifierCode> <gl-cor:identifierDescription contextRef="now">IBCENTER Ltd</gl-cor:identifierDescription> <gl-cor:identifierType contextRef="now">V</gl-cor:identifierType>

</gl-cor:identifierReference> <gl-cor:documentType contextRef="now">check</gl-cor:documentType> <gl-cor:postingStatus contextRef="now">posted</gl-cor:postingStatus> </gl-cor:entryDetail><gl-cor:entryDetail> <gl-cor:lineNumber contextRef="now">2</gl-cor:lineNumber> <gl-cor:account> <gl-cor:accountMainID contextRef="now">10200</gl-cor:accountMainID> <gl-cor:accountMainDescription contextRef="now">Chequing</gl-cor:accountMainDescription> <gl-cor:accountPurposeCode contextRef="now">koreangaap</gl-cor:accountPurposeCode> <gl-cor:accountType contextRef="now">account</gl-cor:accountType> </gl-cor:account> <gl-cor:debitCreditCode contextRef="now">C</gl-cor:debitCreditCode> <gl-cor:amount contextRef="now" decimals="2" unitRef="usd">50000</gl-cor:amount> <gl-cor:postingDate contextRef="now">2005-11-08</gl-cor:postingDate> <gl-cor:identifierReference> <gl-cor:identifierCode contextRef="now">1130</gl-cor:identifierCode> <gl-cor:identifierDescription contextRef="now">IBCENTER Ltd</gl-cor:identifierDescription> <gl-cor:identifierType contextRef="now">V</gl-cor:identifierType> </gl-cor:identifierReference> <gl-cor:documentType contextRef="now">check</gl-cor:documentType> <gl-cor:postingStatus contextRef="now">posted</gl-cor:postingStatus> </gl-cor:entryDetail>

</gl-cor:entryHeader>

XBRL GL Instance Document - example

Chart Of Accounts Instance Document - example

<gl-cor:account>  <gl-cor:accountMainID nonNumericContext="s1">1111</gl-cor:accountMainID>   <gl-cor:accountMainDescription nonNumericContext="s1">Cash </gl-cor:accountMainDescription>   <gl-cor:accountType nonNumericContext="s1">account </gl-cor:accountType> </gl-cor:account><gl-cor:xbrlInfo>  <gl-cor:xbrlTaxonomy nonNumericContext="s1"> http://www.xbrl.or.kr/kr/gaap/ci/2005-10-01/kr-gaap-ci-2000-07-31 </gl-cor:xbrlTaxonomy>   <gl-cor:xbrlElement nonNumericContext="s1">currentAssets.cashCashEquivalents </gl-cor:xbrlElement> </gl-cor:xbrlInfo>

Benefit expected Drill Down From Financial Report to GL Productivity Increase Work Paper Automation To be used for Consolidation To Increase Transparency Enhanced Quality Control Save Space by electronic attachments Remote Review

Considerations Size Of XBRL File

(1,000,000 Records may be 5G Byte) Speed of Transaction

(Much Slower than normal SQL DB) Referential Integrity

(Relationship management) Assurance of the identical source

Tax Preparation Process Automation

XBRL GL

Tax Working PaperTax Working PaperChart of AccountsEntriesAging

Trial BalanceGL

InventoryOpen APOpen AR

Validation CalculationTax Report(XBRL)

ERP Legacy SYS

(*) Current : Fixed Length Text Electric Report

IRS Internal Process Automation

(*) OECD recommends XBRL for tax uses

XBRL Adoption PlanBy Financial Supervisory Service

Financial Information Highway Construction (Based on National Financial Information Framework)

XBRL Adoption Plan By Financial Supervisory Service

XBRL Adoption Plan By Financial Supervisory Service

2006.7 Voluntary Program

Financial Institutions

And Big Commercial

Companies

2007 Mandatory Program Listed Companies

2008 Mandatory Program All Audited Companies

Thank You !!!