Attesting Adios! Airways' XBRL Filings: A Case Study on Performing Agreed-upon Procedures

Abstract

On 30 January 2009, the Securities and Exchange Commission (SEC) released Rule 33–9002. This rule phased in the required use of XBRL. The accuracy of mapping financial statement line items to the US GAAP taxonomy and the tagging of the financial statement facts are of fundamental importance to the accuracy of the XBRL instance document. Currently, there is no requirement for separate assurance on XBRL filings. However, given the significance of the information made available, firms may find it desirable to obtain attestation services. This case provides students with an agreed-upon procedures engagement plan based upon SOP 09–1 ‘Performing Agreed-Upon Procedures Engagements that Address the Completeness, Accuracy or Consistency of XBRL Tagged Data’ released by the Auditing Standards Board in 2009. Students assume the role of an engagement manager and complete an agreed-upon procedures engagement for the quarterly financial statements of Adios! Airways Inc. The case is of general application to an international setting.

Keywords:

• XBRL
• financial statements
• taxonomies
• attestation
• assurance

Acknowledgements

The authors thank Karen van Peursem, Guest Editor, and two anonymous referees for guidance which improved the quality of the paper.

Notes

The Public Company Accounting Oversight Board (PCAOB) is silent on XBRL other than a 2005 staff ‘Questions and Answers’ paper on the then SEC voluntary filings program (PCAOB, 2005). The Q&A saw that auditors might issue an opinion under the Board's interim Attestation Standards. The Board's 2009–2013 Strategic Plan notes that ‘in the future, the SEC may require some companies’ filings to include auditor attestation reports on XBRL data. Such changes would likely require the PCAOB to establish specific standards for such engagements and to include such engagements in its inspections and other oversight activities (PCAOB, 2009).

International Standard on Related Services 4400 ‘Engagements to Perform Agreed-Upon Procedures Regarding Financial Information’ provides a similar illustrative report for factual findings of a generic nature (IAASB, 2009).

XBRL is used in a wide variety of settings internationally (Kernan, 2008). International implementations of XBRL include: financial reporting by listed corporations in China, Japan and Korea; financial reporting by small and medium enterprises (SMEs) in Denmark, Belgium, The Netherlands and Italy; and corporate tax filings in the UK and Germany.

There are other taxonomies that are approved by XBRL International including the CN Listed Company Information Disclosure based on Chinese GAAP or acknowledged (e.g. International Financial Reporting Standards Taxonomy 2009).

However, the SEC suggests that firms create extensions only when appropriate elements do not exist in the US GAAP taxonomy.

Whether or not extensions are allowed depends on the implementation. For example, the Netherlands does not allow extensions.

The IAASB provides similar guidance in International Standard on Related Services 4400 ‘Engagements to Perform Agreed-Upon Procedures Regarding Financial Information’ (IAASB, 2009).

The IAASB is considering issuing XBRL specific guidance for the conduct of agreed-upon procedures engagements (Healy, 2010).