A recent Institute of Internal Auditors survey of more than 200 chief audit executives worldwide found that more than half are not yet familiar with XBRL, and an over whelming number -- 90 percent -- would be interested in guidance on internal auditing's involvement in the new process of filing financial statements with interactive data. In response, The IIA Research Foundation will release guidance on this topic in January 2009.

"It's the responsibility of the company's management to ensure that accurate and complete financial statements are filed in XBRL format. But internal auditors can help implement XBRL and provide objective assurance on the implementation process," said IIA Director of Technology Practices Lily Bi.  "To do so, internal auditors need to first understand the new interactive reporting format, the mandate requirements, and pros and cons of various implementation approaches."

Conducted in early September 2008, the survey found:

• Familiarity: 51 percent of internal auditors responding to the survey don't have any XBRL knowledge at all; 42 percent only know the very basics.
• Adoption: Only 8 percent of respondents said their companies are currently filing financial reports in XBRL format, but more than 37 percent said this will happen in the next three years.
• Internal auditing's involvement: Among the 29 respondents who indicated their companies file financial statements in XBRL, only four said they played some role.
• Adoption approaches: 52 percent of respondents' companies chose an in-house approach, and 48 percent chose a co-sourcing or outsourcing approach when implementing and creating financial reports in XBRL format. None of the respondents said XBRL is used in the company's internal processes other than financial reporting.
• Financial reporting standards: The majority of the respondents stated that they use their country-specific accounting standards, such as US-GAAP; only 17 percent currently use IFRS.
• Need for guidance: Approximately 90 percent of respondents said a guidance paper on XBRL would be of interest to them.

From a technology perspective, says Bi, it's very telling how the survey results indicated that the majority of internal auditors have not yet been engaged in the process of converting financial reporting into an interactive data format. Although XBRL computer language for business reporting has been around for more than a decade, it's likely that companies have recently paid attention to it because of the new mandates. As internal auditing is designed to help organizations achieve objectives and improve operations by evaluating and improving the effectiveness of risk management, control, and governance, the conversion of financial reporting to XBRL will have an inevitable impact on the internal audit profession, says The IIA. Mandates have already been established in countries such as the U.S., Canada, Australia, Belgium, China, Denmark, Japan, France, Netherlands, Singapore, and United Kingdom, with possibly more to come.

"The business report supply chain starts from initial transactions, moving to internal consolidation and reporting, and then to external financial reporting. Due to the urgency of compliance with regulators' mandates, many organizations use XBRL at the end point of this supply chain. But XBRL as an interactive business reporting language can be used throughout various stages of an organization's business report supply chain," said Bi. "This will potentially give internal auditors great opportunities to access deeper business data, perform easier data analysis, improve profiling and risk assessments, and identify potential issues. And as an audit tool, interactive data will ultimately accelerate continuous auditing and monitoring."