AUDITING REQUIREMENTS AND
eXTENSIBLE BUSINESS REPORTING LANGUAGE (XBRL)
By
ABDULLAHI, Sani. Alhaji Ph.D
Faculty of Administration, Ahmadu Bello University, Zaria
OBJECTIVE
To
present an overview of
Auditing, Auditing requirements
and XBRL, as well as the
technical aspects relevant to
financial reporting and auditing.
PRESENTATION OUTLINE
 Introduction
 Origin, Meaning and Objectives of Auditing
 Qualities and Qualifications of an Auditor
 Duties and Rights of an Auditor
 IFRS and XBRL
 Auditing and XBRL
 Challenges of XBRL
 Conclusion
INTRODUCTION
 Most
digital representations of
financial information are coded in
Hypertext
Markup
Language
(HTML)
 The HTML format also does not allow
for easy searching, analysis, or
manipulation of information
…INTRODUCTION
 Extensible Business Reporting Language
(XBRL) was initiated and developed by a
Professional Accountant-Charles Hoffman
but well popularized by a consortium of
leading financial organizations
 It is designed to make financial reports
easier to post on the Internet and easier to
understand once they are posted
…INTRODUCTION
 Investors and other financial stakeholders
need accurate and reliable financial
information that can be delivered
promptly in order to help them make
informed financial decisions.
 XBRL meets these needs and is
particularly important in improving the
usefulness of financial information
delivered via the Internet
ORIGIN
 The word “audit” came from the Latin
word audire, meaning “to hear”. The
origin of audit dates from ancient times
when the landowners allowed tenant
farmers to work on their land whilst the
land owners themselves did not become
involved in the business of farming.
 The landlords relied upon an overseer
who ‘listened’ to the accounts of
stewardship given by the tenants
…ORIGIN
 In those days, the receipts and payments
of an establishment were read to the
hearing of an individual termed the
AUDITOR. Consequently, the individual to
whom the receipts and payments of an
organization were read became known as
the auditor
 Auditing as it exists today was established
only in the later part of the nineteenth
century, born out of the complexity of
modern day business world..
MEANING
 The
Consultative Council of the
Accountancy Bodies (CCAB), defines
auditing as the independent examination
of, and expression of opinion on, the
financial statements of an enterprise by an
appointed auditor in pursuance of that
appointment and in compliance with any
relevant statutory obligation".
… MEANING
 An audit is an independent examination
of the financial statements; the auditor
must be independent of those responsible
for the financial statements (i.e.
management).
 (ii) Matters to be addressed in the audit
report are dictated by the terms of the
auditor(s) appointment and any relevant
statutory and professional matters that
the auditor is obliged to comply with.
OBJECTIVES
 The primary objective of an audit under
CAMA, 2004, is for an appointed auditor
to express a professional opinion on the
financial position of an enterprise as
contained in the financial statement
prepared by the management so that any
person reading and using them can have
faith in them
…OBJECTIVES (Secondary)
 to prevent fraud and errors;
 to detect any form of irregularities;
 to evaluate the effectiveness or otherwise,
of the internal control system within the
enterprise;
 to assist the management in the
establishment of effective auditing system;
 to advise on financial matters for efficient
decision making by the management;
…OBJECTIVES (Pay offs)
 Audited financial statement serves as
a basis of determining the net worth
of a business
 To negotiate bank loan.
 For the purpose of taxation.
 As
a
basis
for
measuring
performances by potential investors.
…OBJECTIVES (Pay offs)
As
a requirement of the
Nigerian stock exchange for a
business that is seeking
quotation.
In aid of insurance claims.
In aid of Professional Advice
QUALITIES OF AN AUDITOR
 Independence
In the accountancy profession
independence is a concept which
is fundamental. Essentially, it is an
attitude of mind characterized by
integrity and objectivity in
approach to audit assignment.
…Qualities (CAMA rules)
 An auditor shall not be an officer or employee of




the client.
Auditor is normally appointed by shareholders
so that he is independent of the directors.
An auditor cannot be a partner to an officer or
employee of the company.
An auditor can only be removed by the
shareholders as they have been appointed by
them.
The auditor reports directly to the shareholders
to avoid his independence being hindered.
…Qualities (CAMA rules)
 The auditor has the right of access to the books
and records of the company at all time. This is
otherwise
known
as
programming
independence.
 The auditor is not qualified under Section 387 as
a receiver of the same company, in the same
accounting year.
 Auditor's remuneration is fixed by shareholders
and not by the directors.
 Auditor has a right to make representations of a
reasonable length in case of an attempt to
remove him from office.
…Qualities (Other Rules)
 The auditor should not be involved in an
assignment where he has relationship
either by blood or by marriage;
 Acceptance
of
undue
hospitality
constitutes
a
similar
threat
to
independence;
 An auditor should not accept to audit a
client where he derives, the greatest
proportion of his recurrent audit fees i.e.
more than 15%.
…Qualities
Competence
Integrity
Objectivity
Confidentiality
Qualifications
 A person shall not be qualified for
appointment as an auditor of a
company unless he is a member of a
body of accountants in Nigeria
established from time to time by an
Act.
 A ‘connected person’ cannot be
appointed as auditor of a company
DUTIES OF AUDITORS
 The primary duty of the auditors of a
company is to make a report to its
members on the accounts examined
by them, and on every balance sheet
and profit and loss account, and on
all group financial statements ( S. 359
CAMA, 1990)
…Duties (Schedule 6)
 Whether the auditors have obtained all the
information and explanations which to their
knowledge and belief were necessary for the
purposes of their audit.
 Whether, in their opinion, proper books of
account have been kept by the company and
proper returns adequate for the purposes of
their audit have been received from branches
not visited by them.
 Whether the company's balance sheet and profit
and loss account are in agreement with the
books of account and returns.
…Duties (Schedule 6)
 Whether in their opinion and to the best of
their knowledge the accounts give the
information required by the Act in the manner
required.
 Whether in their opinion the accounts give
timely, true and fair view;
In the case of the balance sheet, of the state of
the company's affairs as at the end of the
financial year; and
In the case of the profit and loss account, of the
profit or loss for the financial year.
…Duties (Fiduciary)
 Auditors should exercise due care
and diligence in performance of their
duties.
 An auditor should not delegate his
authority
 The auditor should not disclose
confidential
information
or
document entrusted to him during
the course of his audit.
RIGHTS OF AUDITORS (CAMA)
 Right of access at all times to the company's
books, accounts and vouchers, (S.360).
 Right to require from the company's officers
such information and explanations as he thinks
necessary for the performance of the auditor's
duties. (S. 360)
 To attend AGMs, receive all notices of and other
communication relating to AGMs and be heard
at any such meetings (S. 363)
…Rights
Under S. 364 auditors have rights where there is
a proposed resolution for their removal to:
 Receive a copy of the special notice required for
a resolution at a general meeting of the
company to remove the auditor.
 To make representations in writing of a
reasonable length, and
 To request that the representation be sent to
members of the company.
IFRS and XBRL
 IFRS are standards and interpretations
adopted by the International Accounting
Standards Board (IASB). They include:
International
Financial
Reporting
Standards
(IFRS),
International
Accounting
Standards
(IAS)
and
interpretation
originated
by
the
International
Reporting
Standards
Interpretation Committee (IFRSIC)
…XBRL
 XBRL
is a language for the electronic
communication of business and financial data.
 XBRL is an international computer language,
for coding financial information by adding ‘tags’
to each section of financial data, allowing it to
be both computer- and human-readable.
 XBRL is owned by a consortium (XBRL
International). This consortium comprises 642
companies who are a mixture of accountancy
organizations, consultancy firms and software
vendors.

…XBRL (Features)
Financial
Statements
(Source documents)
Taxonomies
Instance Document
AUDITING AND XBRL
 The auditor may give assurance to
an XBRL financial statement
 XBRL Assurance is the auditor’s
opinion on whether a financial
statement published in XBRL
format, is relevant, accurate,
complete, and fairly presented.
..AUDITING AND XBRL
 The auditor needs to design procedures
that determine whether the specifications,
taxonomy, and instance documents are
appropriate for financial statements.
 Adequately designed internal controls
over XBRL that have been placed in
operation and are operating effectively
are important in ensuring the integrity
and consistency of a particular taxonomy
being applied in an entity.
..AUDITING AND XBRL
 General control audit procedures relevant to
XBRL include network operations, application
development and maintenance, and access
controls. Application controls relevant to XBRL
address input, error correction, and output. For
example, when a taxonomy is assigned,
modified, or added, the auditor should validate
or check an instance document against the
taxonomy so to ensure the tags used are all from
the taxonomy.
..AUDITING AND XBRL
 When fully implemented, the risks of
XBRL center on the accurate and
complete mapping of the financial
information and accounting data to the
tags. An adequately designed and effective
internal control structure for XBRL will
ensure that the data retrieved represents
valid and accurate transactions, has
integrity, and is recognized in the proper
accounting period.
..AUDITING AND XBRL





The Auditor checks that:
the right standard (base) taxonomy has been
used;
the custom (extension) taxonomy is complete,
correct and accurate;
the source data used for reporting is reliable;
the correct and complete mapping (or tagging)
of source data to taxonomy elements has
occurred;
the XBRL report (instance) is technically
correct and validates with the taxonomy
CHALLENGES
Resources
Software
Standards
Costs
CONCLUSION
 Auditing is a legal requirement for both public
companies and agencies. XBRL is the new
driving revolution in the world of financial
reporting with adoption in over 120 countries.
There is no doubt that conversion to IFRS and
adoption of XBRL in Nigeria is a huge task and a
big challenge. It is a revolutionary impact
requiring a great deal of decisiveness and
commitment. It is in the best interest of Nigeria
to adopt XBRL while implementing IFRS. A
countrywide intensive capacity building
programme to facilitate and sustain the process
of adoption is needed as early as possible.
THANK YOU
FOR
LISTENINIG