The American Institute of Certified Public Accountants is looking for more feedback on its proposed guidance to establish some criteria for evaluating information in XBRL.
The AICPA's Assurance Services Executive Committee initially proposed the guidance in June for a 45-day comment period, but decided to reopen the comment period through Nov. 30, said Ami Beers, a manager at AICPA involved with business reporting, assurance, and XBRL. “We are hoping for more feedback, especially from the preparer community,” she says.
The guidance is meant to establish some principles and criteria for how to evaluate information that is formatted in XBRL, which is the new data-interactive filing method that is now mandatory for all public companies through a three-tiered phase-in process. While AICPA exists to serve the accounting and auditing profession, the guidance is meant to be useful for preparers as well, she says.
Currently, public companies are not required by the Securities and Exchange Commission to have their XBRL submissions audited. However, based on the phase-in schedule for companies to submit their information through XBRL, they face increased liability as they gain more experience. The largest public companies, which entered their third cycle of XBRL submissions this year, are now facing full liability for the accuracy and completeness of their XBRL submissions under the SEC's usual filing requirements. The second tier of companies will face that same measure of liability when they enter their third cycle next year.
“While the SEC doesn't require auditor involvement associated with XBRL, companies have been reaching out to their auditors to involve them in the XBRL process,” says Beers. “After 24 months of protection from liability, that goes away and the XBRL filings have the same liability as regular filings. Companies realize the importance of accuracy and they would like their auditors to take a look at it.”
Because there is no regulatory requirement for auditors to review XBRL filings for accuracy, there are no standards from the SEC or the Public Company Accounting Oversight Board for auditors to follow. That's where the ACIPA's guidance is meant to help, says Beers. The AICPA first published SOP 09-1, which gave auditors some guidance on performing “agreed-upon procedures” engagements to look over XBRL-tagged data. That was issued before the SEC finalized its XBRL requirements, so the ACICPA is working on an update, she says. The current proposed guidance establishing principles and criteria is a preliminary step to that SOP update, she says.
The AICPA's goal was to focus on guidance that would be useful to those auditors asked by their clients to review XBRL submissions, but it is equally applicable to preparers and reviewers, according to Beers. “It's very user friendly, written in general terms so that it could be applied across multiple applications,” she says.