1. Improving Audit with, and Auditing, XBRL GL Eric E. Cohen eric.e.cohen@us.pwc.com 12 th XBRL International Conference TokyoNovember 2005

2. Background  This far, you have heard about XBRL GL and  Internal reporting  Internal controls  IT controls  In this session, you will learn about  Audit community interest in XBRL GL  Representing a seamless electronic audit trail  Active participation – catalyst to benefits

3. Scope and role of XBRL External Financia l Reportin g Business Operations Internal Financi al Reporti ng Investme nt, Lending, Regulatio n Processes Participants Auditors Trading Partners Investors Financial Publishers and Data Aggregators Regulators Software Vendors Management Accountants Companies Economic Policymak ing Central Banks XBRL GL, the Journal Taxonomy XBRL Financial Statements

4. Audit Community Interest  OECD Taxpayer Services  OECD Tax eAudit  OASIS Tax XML

5. OECD SAF: Brief History  OECD Committee on Fiscal Affairs Forum on Tax Administration  Begun to consider effect of electronic commerce on tax administrators  Value of a standard audit file in light of 25 EU countries auditing one multinational organization

6. OECD SAF -> OECD Tax eAudit  Delivered two documents  http://www.oecd.org/document/57/0,2340,en_2649_33 749_34910329_1_1_1_1,00.html  Guidance on Tax Compliance for Developers of Business And Accounting Software for Tax Purposes  Guidance for the Standard Audit File - Tax  “[R]evenue authorities should be aware of the on-going development of XBRL GL, which could offer a more holistic approach to audit. They should also be aware of international efforts to develop data standards for compliance needs under the formal OASIS Tax XML Committee.[2][2]  In their implementation strategy for SAF-T, revenue authorities should consider data formats that permit audit automation today while minimizing potential costs to all stakeholders when moving to new global open standards for business and financial data such as XBRL GL.”

7. OASIS Tax XML  Under OASIS  www.oasis-open.org  In conjunction with OECD Taxpayer Services  Delivered whitepaper  Support for XBRL and specifically XBRL GL  Expressing interest in a global audit file standard  Committing resources  Whitepaper URL  http://www.oasis- open.org/committees/download.php/14242/OASIS_XM L_Position_Paper_for_Tax_Administrations_v2-01.pdf

8. The Seamless Audit Trail  From initial transaction  Through the system, monolithic or virtual  To reporting  Every system as XBRL GL

9. I N V O I C E May 2, 2003 Invoice #: 10037 ItemDescriptionQtyExtension 1078Blue Widget2002,803.78 1083Cyan Widget1001,402.93 Sub-total:47,592.33 Freight: Total:47,592.33 invoice 10037 2003-05-02 From Initial Transaction

10. Through ERP System Actual/Virtual GENERAL LEDGER AR IM bomp AP PR customersvendors items employees OE AR, IM PO AP, IM sales orders purchase orders FA assets Outsourced procurement REPORTING Outsourced e-ordering Off-site fullfillment Third party payroll

11. XBRL “FR” iso4217:usd <context holding date or period 2006-06-30 entity and segments Megacorp scenarios actual> facts with fact value and pointers to above ci:Equipment 5,400 Dimensional Taxonomy XBRL GL Details underlying the 5,400 as provided in the system, and published in the instance ci:Equipment To Reporting

12. System 3System 1 Identificador de la Cuenta Descripción Principal de la Cuenta Monto Monetario Fecha de Asignación/Ingreso 勘定科目番号 勘定科目説明文 金額 転記日付 Account# Description Amount PostDate System 2 accountMainID accountMainDescription amount postingDate accountMainID accountMainDescription amount postingDate accountMainID accountMainDescription amount postingDate XBRL GL Every System as XBRL

13. Seamless Audit Trail  XBRL GL can represent any and all of the chain  Cross referencing between XBRL GL documents  uniqueID and other tools  Of course, XBRL GL can only represent what is available

14. Flow: XBRL GL Can Represent 1. Trigger: a source document is represented electronically 2. Source Journal The document is entered and posted, creating a source journal. 3. Journal entries: The accounting implications are gathered and prepared for the GL. 4. GL Entries: the journal entries are prepared for posting to the GL. 5. Journal History: The entries are posted to the Journal History. 6. Consolidation: The data at journal entry or trial balance level are brought together. 7. Reporting: Consolidated numbers combine for eventual reporting. Posting Journal Invoice Distribution To GL Report Source Journal General Journal Transaction Posting Journal History Report Consolidating/ Consolidated

15. Unique Attributes Between Stages 1. Document type, document #, C/V/E/O #, document date, physical location 2. Source Journal Code, number, date 3. Source system, entry number, posting date? 4. Entry number, posting date? 5. Originating organization 6. Mapping to reporting 7. ???

16. XBRL GL Can Capture the Fingerprints Document number, type, date Party type, ID Document location MD5, SHA1 Convert to/from XBRL GL

17. Original paper or electronic document Court system: Assigned number by liber and page Can simply assign by a counter a unique number Unique index: Document type Document number Document source Document date entryDetailonly has onedocumentNumber can appear on manyentryDetail entryHeadercan have manyentryDetail

18. FR Tax Mgmt Stat Integrating the Preparatory Chain Estimates Accruals/Reserves Adjustments Currency Intercompany Top-side adjustments TRACING VOUCHING

19. XBRL GL  As standard export format for an “audit file” … and more  Built in to audit software today  As payload for Web services tomorrow

20. As Input to Audit Documentation

21. CAATS and CA-AuD Computer Assisted Audit Techniques Computed Aided Audit Tools CA-AuD may Have embedded CAAT capabilities Rely on external CAAT services CA-AuD must Capture procedures performed Evidence obtained Conclusions reached CAATs need to be smarter, communicate better Need CAAT/CA-AuD exchange vocabulary Is it the right CAAT food for the test? Evidence retention Reporting CA-AuD: Would you run this test for me please? CAAT: With pleasure – here is your query and results. CA-AuD: Thank you kindly. Hmm, I wasn’t expecting that. Can you increase the sample size? CAAT: With pleasure – here is your query and results. CA-AuD: Thank you kindly. Much better. That’s all for now. CAAT: All your base are belong to us. CA-AuD: Huh?

22. Interesting Audit Related Fields Element (gl-cor)Usage uniqueIDA “Serial number” for an accountingEntries structure revisesUniqueIDAn indicator that this accountingEntries structure reflects a change to a previously provided batch of information, showing the original uniqueID from that accountingEntries structure revisesUniqueIDActionAn indicator that the new batch of information either replaces or adds to the original batch Issues: How can uniqueness for [uniqueID] across accounting systems, both within a single organization and across multiple organizations be encouraged?

23. Active Participation – Catalyst to Benefits  MAP  Map to your systems and develop a prototype  GAP  Influence your software developers  LAP  Help us determine what’s next  OVERLAP  Help with the XBRL GL to XBRL FR linkages

24. Questions?  XBRL GL  xbrlgl@xbrl.org  Eric E. Cohen  eric.e.cohen@us.pwc.com

25. Additional Slides  Organization of tax-related groups in OECD  Cooperation with OASIS Tax XML and XBRL

26. OECD Organization for Economic Cooperation and Development CFA Committee on Fiscal Affairs FTA Forum on Tax Administration (2002) Services Services Subgroup Compliance Compliance Subgroup WP1 Working groups WP2 Working groups WP9 Working group 9 WP… Working groups TIES Tax Information Exchange System Subgroup SAF Standard Audit File IWG Informal Working Group STF Standard Transmission File Deliverables OECD Tax Related Groups * Note: this is not an official representation

27. FTA Forum on Tax Administration (2002) Services Services Subgroup Compliance Compliance Subgroup SAF Standard Audit File Tax eAudit formerly IWG Deliverables OECD FTA, OASIS, XBRL OASIS Organization for the Advancement of Structured Information Standards OECD Organization for Economic Cooperation and Development Tax XML Tax XML TC XBRL XBRL Liaison WG Dom Domain WG Tech Technical WG XBRL Extensible Business Reporting Language XBRL GL XBRL GL WG XBRL GL