APB issues guidance on XBRL tagging of audited accounts
The guidance has been published after a joint announcement made by HMRC and Companies House in September 2009 that company tax returns for accounting periods ending after 31 March 2010 and submitted to HMRC after 31 March 2011, including supporting statutory accounts and tax computations, will need to be filed electronically using Inline XBRL (iXBRL) format.
The Bulletin clarifies that there is no requirement for the auditor to provide assurance on the XBRL tagging of the accounts or on the XBRL data, even though Companies House will, in the near future, accept financial statements in iXBRL format. In particular, as the tagging is simply a machine-readable rendering of the data in the accounts and not a separate document, it will fall outside the scope of an audit performed under ISAs (UK and Ireland). The XBRL data will therefore not amount to ‘other information’ that the auditor would need to ‘read’ to identify any material inconsistencies with the audited accounts as required by ISA 720 A .
It would be nevertheless possible that audit clients, or regulators in the future, will require the auditors to provide assurance on the accuracy of the XBRL tagging. Such services will need to be agreed from time to time between the management of the entity and the auditor to define their precise scope and nature.
The Bulletin also takes into consideration possible threats to auditor independence when services relating to the XBRL tagging are requested. The services may consist of performing the tagging exercise, providing assurance about its accuracy, advising on the choice of individual tags, supplying software that automates the tagging or providing training in XBRL tagging. By their nature such services may fall into various categories of non-audit services, such as accounting, taxation and IT, and may present risks in terms of management threat and self-review threat.
Unless the auditor applies the ES- Provisions Available for Small Entities, the management threat, especially relating to performing the tagging exercise, will need to be addressed by ensuring that the entity has informed management in place that takes responsibility for making the management decisions in respect of the tagging.
The self-review threat in respect of XBRL tagging engagements may arise if the tagging is used to generate the financial statements. At the moment such risk is not likely to arise as it is envisaged that the tagging will take place after the accounts have been generated. However it is also likely that in the future XBRL will become integrated into accounting systems and that it will be difficult to separate the tagging from the accounting services, therefore triggering the application of ES 5 provisions.
Bulletin 2010/1 may be downloaded from the Publications (Bulletins) section of the APB website.