One of the most significant laws aimed at government transparency was passed and signed as a law in 2014. The “Digital Accountability Transparency Act” (DATA Act) (Pub. L. 113-101), or DATA Act set the stage for the financial reporting of government agencies to move into the digital age. One of the provisions of the law directs the Treasury Secretary and the Director of the Office of Management and Budget (OMB) to establish government-wide financial data standards for federal funds and entities receiving such funds. A full summary of the Data Act can be read here.
From a practical perspective, the DATA Act is all about building an infrastructure to publish government data using consistent identifiers and data languages. According to Hudson Hollister, Executive Director of the Data Transparency Coalition, the DATA Act is a first step in getting the government to publish data in standardized formats making it interoperable across different agencies. The objective is to provide both the public and the leaders of government, enhanced information leading to more informed decision making. Similar to the efforts to codify and report US GAAP compliant financial data to the Securities and Exchange Commission (SEC) in the XBRL format, the DATA Act seeks to create a platform for data centric standardization, publication and reporting.
Implications for XBRL
The current buzz surrounding the DATA Act in the XBRL software community centers on the requirement that Treasury is mandated to specify a standard data format no later than one year after the bill becomes law. The DATA Act was signed by President Obama on May 9, 2014. What should the Treasury be looking for in a data standard? According to Hudson Hollister, Executive Director at the Data Transparency Coalition in Washington, D. C., the Treasury should be looking for a standard that is:
His remarks on the subject came from a Federal Spending Transparency Town Hall meeting held on September 26, 2014. Hollister’s presentation is available here. Here is the announcement for the meeting:
With the recent enactment of the “Digital Accountability Transparency Act” (DATA Act) (Pub. L. 113-101), Treasury has kicked off the government-wide implementation to the Federal Financial Transparency Legislation by hosting a Data Transparency Town Hall on September 26, 2014. Senior officials from the White House, Treasury, and all major Federal agencies participated in a one-day town hall meeting devoted to learning about DATA Act implementation, hearing from members of the public about the importance of Federal spending transparency, and learning from experts on what is possible from a technical implementation perspective. For more information about the meeting, see the Federal Register Notice here.
The XBRL standard meets all six of the above criteria established by Mr. Hollister. Having proven its worth and flexibility not only in the USA but also in active and successful applications world-wide, XBRL has proven itself time and time again. When approached on the subject of which data standard will the Treasury choose, Hollister remarked, “I’m pretty sure it’s going to be XBRL.”
Herschel Chandler, Principal Consultant, Managing Partner, Information Unlimited Inc., writing on the GitHub Federal Spending Transparency Open Data website had this to say about the issue. “It seems like the answer should be that Treasury/OMB consider the standards in place by other governments. Unless there is very compelling evidence, and “we’re special” isn’t compelling, XBRL seems like the de-facto choice for a data standard framework. It has off the shelf compatibility and an existing internal user base of experiences and process-related rules from which to draw. IMO, creating our own new standard is not a standard that should be considered. Further, most standards are extensible. We can likely find a way to handle any real special cases.” This makes a strong case for XBRL as the data standard of choice for implementation of the DATA Act. Mr. Chandler is also an active member of the American Council for Technology-Industry Advisory Council (ACT-IAC). The ACT-IAC recently published a white paper on the subject of what the Treasury should do with respect to choosing a data standard. The lead author of the document is Mr. Chandler. The white paper outlines the numerous challenges faced by the Treasury and the Office of Management and Budget (OMB) as it seeks to meet the Data Act’s May 9, 2015 deadline for establishing the data standard’s technical base. Additional comments can also be found at the Github open forum on federal data transparency.
Impact of DATA Act for SEC Filers
The SEC requires companies who fall under their regulations to submit certain schedules in the XBRL format. XBRL is simply the independent and open standard markup language used by the SEC to uniformly translate thousands of accounting choices into a digital format that is readable by computers. Similar to the data formatting requirements of the DATA Act, XBRL is a developed standard used to gather and publish financial and business data. If the Treasury were to select XBRL as the core technology within the regulations of the DATA Act, the impact could be profound. Overnight, thousands of government agencies will be looking for guidance about how they will translate what they do every day into the digital format. This activity will spur a churn within the software development community which should result in improvements to everything related to XBRL.
One example of potential innovations coming from the DATA Act might be in identifying solutions utilizing Inline XBRL, which blends text and numbers into machine readable XBRL while maintaining human readable formats. Government agencies would love to be able to automatically extract financial data from grant applications without having to manually re-enter data. As the SEC continues to investigate inline XBRL for SEC filing, the agencies complying with the DATA Act will be paying close attention.
In the final analysis, the DATA Act mandates that a data standard be chosen. The selection of the appropriate technology must enable government entities to report spending, budgets, contracts, grants and more in a standard, data centric way. Whatever the underlying technology chosen, plenty of hands will have to get dirty digging through the details of data definitions and identifiers to make the information discoverable and publishable. The lessons learned during the DATA Act implementation will pave the way for innovations and improvements for users and preparers of XBRL data especially if XBRL is chosen.
DataTracks US is part of DataTracks Services Limited, leaders worldwide in preparation of financial statements in EDGAR HTML, XBRL and iXBRL formats for filing with regulators. With a track record of over 10 years, DataTracks prepares more than 12,000 XBRL statements annually for filing with regulators such as SEC in the United States, HMRC in the United Kingdom, Revenue in Ireland, ACRA in Singapore and MCA in India.
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