XBRL as a New Risk

New technology brings new risks. If there is anything that is certain, it is that the introduction of XBRL, a new reporting technology that today is fairly poorly understood by either the auditor or the filer, will be viewed as an area of significant potential additional risk. Auditing standards professionals in the accounting and auditing firms will understand the risk (or at least understand the uncertainty associated with new technologies applied to financial reporting.)

When XBRL becomes mandatory, the auditor that says "okay, we'll only audit the HTML version of the financial statements" will be taking on a huge level of risk. As a result, we should expect the professional practices and risk management functions within the auditing firms will insist on auditing the XBRL as well, or they will refuse to provide an opinion on the rest of the financial statements in any other format.

Consider the alternative, and picture a future courtroom. On the stand is the audit partner who signed off on the opinion. "Can you please tell the court why you chose not to audit the information that your own literature has been saying for years will be the information that will actually be used by the investor to make investment decisions?" I doubt that is a question that any audit partner will want to have to answer.

It stands to reason we should expect auditors will take the most cautious approach when pre