The Public Company Accounting Oversight Board (PCAOB) on May 25, 2005 released staff questions and answers related to attest engagements regarding eXtensible Business Reporting Language (XBRL) data furnished under the Securities and Exchange Commission’s (SEC) XBRL Voluntary Financial Reporting Program on the EDGAR System.
The questions and answers provide guidance for auditors engaged in reporting on whether the XBRL data accurately reflects the corresponding information in the official EDGAR filings. In theory, XBRL ought to reduce errors in financial statements by promoting automated processing of business information limiting the need to enter data manually. By providing a tag for each individual data item, XBRL allows computers to read the tagged bit of data and process requests for information. The SEC’s XBRL voluntary financial reporting program was designed to help the SEC assess the ability of public companies to tag their financial data using XBRL and evaluate the benefits to end-users of using tagged data.
The voluntary program does not require companies to obtain auditor attestations to XBRL data. The questions and answers provide guidance addressing both performance and reporting matters related to applying the PCAOB’s attestation standards to auditors engaged in performing such attestations to those companies seeking such assurances.
“There are a few individuals and organizations that don’t yet understand the benefit and potential of XBRL, or think that it should be done in some other manner,” Karl Best, executive director of XBRL International, told internetnews.com. “We’re working on them. I would class XBRL as mature enough to do useful things, but certainly there is more work to be done. But the core spec is there.”
The attestation guidance will be useful in identifying the types of data and inquiries XBRL handles well in addition to identifying areas where work may still need to be done. It will also help companies and auditors to become more comfortable with the use of XBRL in the course of their regular duties.