The Auditor and Corporate Reporting on the Internet: Challenges and Institutional Responses

The use of Internet technology for corporate reporting is now a well‐established activity in countries that have developed securities markets, raising many questions for the provision of audit and assurance on such reports. This paper reviews the state of guidance provided by securities regulators and audit standards setters. We find that, notwithstanding the recognition by various audit standards bodies of the need for further guidance to auditors on the implications of Internet financial reporting; the actual pronouncements made thus far by the various bodies around the world fall considerably short as a response to the challenges that arise from current and future Internet reporting technologies. We point in particular to shortcomings related to the way in which users interact with Internet financial reporting web sites, the implications of this interaction and on what we term ‘information component’ technologies such as the XML‐based eXtensible Business Reporting Language (XBRL). The paper sets out a range of institutional, standards setting and technological solutions to these issues.