© Grant Thornton International. All rights reserved. How XBRL makes compilation and preparing...

© Grant Thornton International. All rights reserved.

How XBRL makes compilation and preparing financial statements / tax filings easier and cheaper

A new role for the intermediair

Thursday, 25 June 2009

Drs H.W. Knoop RA


Introduction

– Developments in the Netherlands– Covenants– Control Methodology– Working processes within GT– Some recommendations


Developments in the Netherlands

Financial Statements (filing)

2007 Dutch Statistic Reports

Tax return VAT

Tax return Pay-roll taxes

2008 Financial Statements on tax principles

Tax return corporate income tax

2009/ Banking taxonomy (extension)

2010 Tax return income tax

DTP XBRL for ALL companies in the Netherlands


Former situation: more differences than similarities

Financial Statements

• Principles based on Dutch GAAP• True and fair view• Disclosure requirements• Models for financial statements• Requirements by law (e.g. filing)

Tax return corporate income

tax

• Principles based on tax principles• Prudence• Influenced by politics• Additional tax disclosures• Tax formalities


Desired situation: Same principles and requirements - 1

Financial statements

Tax return

corporate income tax

• Authoritative taxonomy • Minimum position for financial statements included• Both commercial and tax accounting principles included• Not in taxonomy: then not required

• Dutch law was changed • FS on tax accounting principles possible• Filing of instance documents possible

• Guidance on tax accounting principles•Style sheet

Which changes are required by government:


Desired situation: Same principles and requirements - 2

Balance sheet (filing)

Banking(Short)

Tax return

FS on taxprinciples

= Balance sheet (filing)

= (short) Tax Return Corporate Income Tax

= Financial Statementson tax principles

= Banking reporting

= Total integration


More developments: covenants

Covenants between several audit firms/software companies and Ministries:• Financial statements (filing) Ministry of Justice• Short tax return (corporate Ministry of Finance/

income tax) tax authorities

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(Dis)Advantages covenants with XBRL

Final tax assessment when filed

70% less than normal tax return

No inspection at client

No differences FS and tax return

Potential efficiency benefits

Restructuring and reimplementation of financial system

Confidentiality rules

Liability (client versus audit firm)

Expectations client benefits

GO

NO GO


Requirements included in covenants

• Good quality procedures within audit firm• Meta-supervision by tax authorities • Determination of the profit (read: financial statements)

is based on ISA's (principle based)• No additional tax procedures are instructed • All tax issues are upfront proactive discussed with

tax authorities• Confidentiality issue• Materiality issue


Desired situation: Control Methodology

9. Receive

confirmation

8. Send XBRL doc

7. Validate XBRL doc

6. Generate XBRL doc 5. Check data

insource system

4. Adjust data and

aggregate in source system

3. Mapping to taxonomy

2. Extend taxonomy

1. Publication / implementationnew taxonomy

Qualityassurance

Mapping control

Data consistency control

Validation control

Send control


A number of Control measures

Control measures

Audit trail visible (edit/ approval/ submit)

Segregation of duties (data entry/ review/send)

No manual changes in instance document

Inconsistency in reports (presentation)

Validations (e.g. Roll-up, zero-balancing, reconciliations etc.)

Blocking trans-mission in case of inconsistencies

Error reporting

Right version of taxonomy used

Right context

Status versions (draft – final)

Encrypted saved and sent

Reporting all non-mapped accounts

All non-mapped accounts are highlighted in red

Change management procedure for chart of accounts

Step 6 Step 7Step 5

Send XBRL doc

Step 8Step 3

Validate XBRL doc

GenerateXBRL doc

Check data in source system

Mapping to the taxonomy


Working processes within GT?

ClientG/L

Financial system

Report generator

Tax software

StatutoryFinancial

statementsFinancial

statements (filed)

(short)Tax return

Banking reports

Dutch Statistics

CLIENT

PORTAL

Electronic working processes


Some recommendations

Integrated software:– Financial accounting, report generator and tax software integrated in

one system– Link with latest version of taxonomy – Import and export features of XBRL– Only extensions on taxonomy possible– Validation rules in software – Consolidation rules

Electronic working programs

Client portal – Data sharing with client– Authorization process of documents included


Questions?

Hanneke KnoopEmail: [email protected]

© Grant Thornton International. All rights reserved. How XBRL makes compilation and preparing...

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