Communications and Network, 2013, 5, 16-19
doi:10.4236/cn.2013.53B1004 Published Online August 2013 (
A Research on the Application of XBRL in the
Independent Audit
Zhaoyang Wang
1Economy& Management School of Wuhan University
2Hunan University of Finance and Economy, Wuhan, Changsha China
Received July, 2013
XBRL (extensibility commercial language) network financial report is gradually extending in our country, which will
have a far-reaching impact on independent audit. The research on the application of XBRL’s principle, operation proc-
ess and the improvement of the audit process in the audit work is helpful for bringing some developing measures for
independent audit based on XBRL.
Keywords: XBRL; the Independent Aud it; Audit Quality
1. Introduction
In January 2011, The Treasury and the securities regula-
tory commission issued “the notice about some matters
of implementing enterprise accounting standard general
classification standards”, according to which, the first
implemented public accounting firms with qualification
of Securities and futures business and their relevant
business shall report XBRL2010 annual financial reports
instance document and expansion classification standards
made by their auditing customers of a-share listing com-
pany to the Treasury, through the certified public ac-
countants industry management system between May 1,
2011 to June 30.
China's listed company formally strides into the net-
work financial statements era, the network financial re-
port based on XBRL will have great effect on the audit of
China's capital market.
2. The Application Principle of XBRL in
To understand the application of XBRL in audit, you
should first understan d how XBRL work s. Applicatio n of
XBRL asks to understand a few major terms: specifica-
tions, taxonomies and instance documents
The XBRL specifications are the software code to de-
scribe financial information forms. Technical specifica-
tions help software developers and programmers to cre-
ate mutual exchange of digital file, it allows users of fi-
nancial information do comparison to different com-
pany’s financial statements, even if the original format of
the financial statements is completely incompatible.
Specifications are not only for financial statements, but
for dealing with all the digital report, the general ledger
and the non-financial information.
XBRL taxonomies are the describing standard to pre-
sent business information and accounting statements. It is
made up by an XML schema file and the link library
which is within the mode file or directly referred to it.
Through XBRL, financial report producers can store the
link data elements in accounting database. It forms a
standard way of using XBRL to code that based on the
classification standard [1]. For example, an annual report
including management decision and analysis, financial
statements, note disclosure, the audit opinions can use
XBRL coded.
XBRL instance documents are used to record the ac-
tual value of the business, and to provide the necessary
background information to explain the fact value. A
XBRL instance file usually consists of one or more clas-
sification standard, different classification standard links,
expanses, modifies in different ways between each other,
the explaining of XBRL instance documen t re quires con-
sideration of related classification standards [2]. For ex-
ample, one instance documents can include a company's
annual report, surplus disclosure and general ledger and
other detailed data. Instance document can make the fil-
ing work of external financial information and internal
financial information more easily, because XBRL can
output different types of data for different financial in-
formation terminal users through the computer program
and its operation. Instance document can also provide
*Humanities and social sciences youth project of the education ministry
(12 YJC790247), Hunan soft science project (2011ZK3025), and Hu-
nan social science fund project (08 YBA151)
Copyright © 2013 SciRes. CN
Z. Y. WANG 17
style form for users to print output through the browser
or other format.
After understanding the basic working principles of
XBRL, we come to the application principle of the
XBRL in independent audit, which can be understood
through a graphics: as shown in Figure 1:
3. Influence of Which XBRL does to the
Traditional Audit
3.1. Influence of which XBRL does to Audit
The application of XBRL techno logy will greatly expand
the auditor’s audit scope. Make the auditor can real-time
monitor the auditees’ financial data. At the same time,
because of the using of XBRL computer technology, the
auditor would liberate from simple trial test program,
they can generate corresponding audit report in real time.
3.2. Influence of which XBRL does to Audit Risk
Because of XBRL, financial information can achieve
real-time disclosure. So the misstatement risk of financial
statements would be much higher. Since the financial
statements are made with XBRL, auditors need to do
controlling test to XBRL’s technical standard, classifica-
tion standard, instance document, in addition to substan-
tive test.
3.3. Influence of which XBRL does to Audit
Because of the application of XBRL technology, com-
puter technology and Internet technology, the auditor can
reduce the time for the entry, conversion, inquiry, index
of data, so auditors have more time on reviewing audit-
ees' financial information analytically. This is helpful to
improve the efficiency and effectiveness of the analytical
review. They can take a lot of substantive tests as well,
and this substan tial test could not be done due to the high
cost of artificial testing time, so that using the XBRL will
improve the audit quality to a certain extent. Empirical
studies on the influence of XBRL’s application in audit
quality will be a hot spot of theory research after XBRL
is applied in China’s enterprises.
On the other hand, because XBRL is based on com-
puter technology and Internet technology, therefore there
are corrupt and security problems. Compare to paper
document, electronic data is easier to be maliciously
tampered and leave no trace [2]. At the same time, the
existence of network attack is also an important problem
to affect the quality of audit based on XBRL.
4. The Improvement of Audit Program in
4.1. The Audit Preparations for Application of
XBRL to be universal in our country is just a question of
time. After the company is in full implementation of
XBRL network financial report, as for auditors, their
risks mainly focus on if the financial information and
accounting data are accurate and complete mapping to
mark. So the audit should focus on whether the company
designed a full and effective internal control system for
XBRL, and whether the internal control system should be
able to ensure the exchange of relevant financial data
efficiently and accurately, and the financial data is re-
corded in a proper accounting period.
Another key that auditor concerns are whether all rel-
evant data in data sources is already marked, namely,
whether the report is finished. This involves reviewing
markers system in the software system to ensure the in-
formation is new and the data element or new account
included in the process of mark. This work can be done
with the control function of the computer program [3].
Figure 1. The application process of XBRL in independent audit.
Copyright © 2013 SciRes. CN
4.2. XBRL Operating Environment
Besides pay attention to the XBRL internal control sys-
tem of auditee company, the auditors need to design cor-
responding tests to determine whether the XBRL techni-
cal criteria, classification standards, and instance docu-
ment is fit for financial statements. Auditors should have
relevant expertise for these test programs, and are quite
familiar with industry standards and any specific gener-
ally accepted accounting principles. The audit procedure
should focus on the technical specifications, classifica-
tion standard and instance document background, check
into the c details of XBRL to ensure that they are the
latest and the most appropriate [4]. The internal control
system designed on the base of XBRL should focus on
operation and effectiveness of operation competence, to
ensure that a complete, consistency, specific classifica-
tion standards were applied in a new entity. General
XBRL audit control procedures include network opera-
tion, application development and maintenance, and ac-
cess control. XBRL application program control includes
address input, error correction and output. For example,
when a classification is newly set, modified or added, the
auditor should verify or check the file classification
standard examples to ensure that the labels being used
are from classification standard.
4.3. The Network Security
Because XBRL is the financial report based on Internet,
and can provide dynamic link from the financial infor-
mation file to the foundation database. In this case, the
substantial safety risk exists in operating systems, appli-
cations and database. For example the wrong configura-
tion could lead to unauthorized change or the destruction
of the data, and influences the correctness of the financial
statements. When these links appear, the auditor should
consider the security of the entity and adequacy of the
procedures, including setting up a firewall, enhancing the
operating system and other relevant safety control, and
backup the most primitive da ta.
The specific improvement process of audit procedure
is as shown in Figure 2.
5. New Requirements for the Application of
XBRL Technology
5.1. Requirements to Auditors
With the application of XBRL network financial report,
the financial report which the auditors confront is no
longer of the financial information isolated, but an Inter-
net database [5]. This requires the auditor should not
only put on practical test procedures, but also need to
identify whether the XBRL technical specification, clas-
sification standard, and instance document of the auditee
unit is appropriate. On the one hand, it increased the
auditor's audit risk. On the other hand, it put forward new
requirements to the auditor's knowledge system. Not only
requires the auditors be proficient in professional
knowledge, but also requires them have in-depth under-
stand for the principle and process of XBRL.
5.2. Requirements to Accounting Firms
From the notice of The Treasury, accounting firms have
an important role in applying XBRL in our country. So
accounting firms should first be informative.
On the one hand, accounting firms should well train
their auditors, let them grasp XBRL audit technology
proficiently to prepare for audit technological reformation;
Figure 2. The improvement of audit procedures based on XBRL.
Copyright © 2013 SciRes. CN
Z. Y. WANG 19
On the other hand, accounting firm itself should get in-
formative reformation. The main goal of accounting firm
information is to establish and perfect the information
technology standard system, establish and improve data
standard system and large database, promote the in-
ter-communication and information sharing and business
cooperation, focus on the d evelop ment and ap plication of
series software[4]. So the accounting firm the informa-
tion should become a turning point for XBRL technology
promotion. Through the information of accounting firms,
we can realize the purpose of promoting XBRL technology.
To continue with, accounting firm should control risk.
Because of XBRL, the auditor's risk will increase, so the
public accounting firm should control risk more strictly,
in order to improve auditing quality.
5.3. Requirements to the Auditee Unit
With the implication of XBRL network financial report,
enterprises should establish special XBRL internal con-
trol system, and make appropriate choose to the XBRL
technical criteria, classification standards, examples
document for their own unit. Because of the first applica-
tion of XBRL, enterprises should take double system
operation, so that they can get both XBRL financial re-
port and the tradition al financial report, in order to verify
the relevant technology and internal control system of
XBRL. On the other hand, the auditees should actively
cooperate with the auditor, make detailed introduction
for XBRL application and accounting information sys-
tem of their company, to help the auditor b e familiar with
the environment quick ly, and make a right judgment.
5.4. Requirements to the Government and
As for the application of XBRL network financial report,
in our country, the government has played an important
role. But for the moment, XBRL corresponding doesn't
sound. The government should implement the relevant
decrees to promote enterprises to take XBRL reform
quickly, and put on rewards or punishment on their re-
form results. And timely organize related training for
accountant and auditor, so that they can be familiar with
XBRL and correctly use it in a short time.
And from the point of their own interests, enterprise
stakeholders should also pay attention to the enterprise’s
XBRL reform, and deepen their understanding of XBRL
working principle by learning.
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sible Business Reporting Language (XBRL),” Journal of
Information Systems, Vol. 19, No. 1, 2005, pp. 19-41.
[3] Z. M. Lv, “The Reengineering of Audit Process Based on
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Copyright © 2013 SciRes. CN