kansas elsas klint 2011

Revamping the Audit Approach using Accounting Equations:

Processing XBRL-tagged Data in an XBRL-tagged Top-cycle

Philip Elsas, ComputationalAuditing.comPaul Klint, CWI.nl

Trevor Stewart, Deloitte & ToucheRajendra Srivastava, University of Kansas

Hans Blokdijk, Limperg InstituteMiklos Vasarhelyi, Rutgers University

Overland Park, Kansas April 28-30, 2011

5th University of Kansas International Conference on XBRLTransparency, Assurance, and Analysis

ComputationalAuditing.com

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Top-cycle as Model for XBRL Assurance


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Why a model for XBRL assurance?

• Top-cycle auditing model guides design of Domain-Specific Language (DSL) for XBRL assurance

• Model-based closure around XBRL assurance language

• Tagging framework for both data and operators

• Model-driven auditing for real-time trust

• To avoid a too complicated and too flexible language


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AccRec: AccRec[B] + SP * Sales – AccRec[E] → CashRcpt Inv: Inv[B] + Pur – Inv[E] → Sales AccPay: AccPay[E] + CashDisb – AccPay[B] → PP * Pur Cash: Cash[B] + ColVAT + CashRcpt – PayVAT – Cash[E] → CashDisb VAT: VAT[E] + VPP * Pur + PayVAT – VSP * Sales – VAT[B] → ColVAT

Wholesale Trading Enterprise, Elementary Top-cycle Model


Top-cycle model as Diagram 5


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Top-cycle model as Matrix


Revamped Audit Approach: 5 phases7

1. Mining ‘As Is’, actual top-cycle process model

2. Identify ‘To Be’, normative top-cycle

3. Continuous Auditing: continuous confrontation to norm

4. Dempster-Shafer-Srivastava method for aggregation

5. Publish deviation top-10 on interactive dashboard

“Next Generation Auditing: Data-Assurance as a Service”


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Phase 1: Process Mining


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D

A

C

B

Phase 2: Identify norm in ‘As Is’


Phase 2: Resulting in normative top-cycle 10


11Revamped Audit Approach: applyingXBRL tagged data & operators in all 5 phases

Topcycle-embedded Audit Assertions

XBRL US GAAP Taxonomy

Design & Development of a Domain-Specific Language

for Auditing

A software engineer's view:● DSL captures domain knowledge● DSL leads to 10-50x increase in software productivity

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Domain Knowledge

Anon. Inuit Woman

Inuit: 20 words for snow

Th. Limperg

Auditor: 20 words for debt

Words capture essential domain knowledge:describe them in feature model/ontology/... and use as basis for DSL design

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DSL realization

Design ofauditing DSL

Design ofauditing DSL

DSLCompiler

DSLCompiler

Software services formining/checking/visualization/...

Software services formining/checking/visualization/...

Implements(See rascalmpl.org)

Use meta-programming to compile DSL to (Java-based)service implementations

Use meta-programming to compile DSL to (Java-based)service implementations

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Scoping our DSL

● XBRL Formula● XBRL ontologies● Process mining● Dempster-

Shafer-Srivastava

● Continuity equations

● Audit planning questionnaires

● Reporting with drill down

Let's bring the benefits of a DSL to the auditing domain and profit from

the power of meta-programming languages like Rascal

Let's bring the benefits of a DSL to the auditing domain and profit from

the power of meta-programming languages like Rascal

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What’s in it for an audit firm?

Invitation to team up on R&D projects

• ROI: ensure connecting R&D and relevant know how• Avoid overlapping investments

What to bring to the table?

• Client accompanying you in pilots

Top 3 proposals are rewarded with team-up connecting to your audit practice

• Proposal on pilot studies

• Time commitment of audit expert


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Extend E&Y CARAT project proposal on audit tools & techniques by inclusion of pilots on owner/franchisor oriented audit approach with E&Y audit clients:

Golden opportunity for Ernst & Young

Build on successful project of Twinfield for McDonald’shttp://www.vanoers.nl/Home/Diensten/Accountancy/Adviseurvoorfranchisenemers.aspx

& include support of subcontractors in pilots:

• Anne Rozinat - Fluxicon, process mining

• McDonald’s - global franchisor-franchisee

• Chris Nedza - CEO of ZeeZor, real-time relation franchisor-franchisee: revenue completeness

• Twinfield - no.1 in online accounting


18Current considerations

Netherlands – establishing platform for internationalizing proven Equational Audit Approach: integrated approach for owner-ordered and management-ordered auditing

• China is on the outlook for alternative audit approach• Excellent appreciation of ownership orientation

Finalize as white paper for China’s Ministry of Finance, Accounting Regulatory Department - advised by Fou-Khan Tsang, board member of SRA INAA:

• Top-cycle concept has high yin-yang quality

India – current EY CARAT collaboration is springboard


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Your questions,

or advisory [email protected]

kansas elsas klint 2011

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