XBRL meets the needs for openness and transparency for AARA money
idea
What is the idea?
As Controller of the State of Nevada, my state supports the commitment to openness and transparency in tracking grants and other financial information to better the operation of government. We believe the open, Internet-enable, public-private standard called eXtensible Business Reporting Language (XBRL) (www.xbrl.org) is the most logical XML standard to pursue because it allows the sharing of critical financial information across multiple agencies and departments running on different software/incompatible systems. Currently, aggregation of data for appropriations, revenue collection, and regulatory reporting is extremely difficult and costly for each of the agency jurisdictions within my state. The resulting information may be too late for real-time decision making, and too complex for anyone but a professional auditor to understand and analyze.
In my state, we have made the decision to move forward using the XBRL business reporting standard. With the removal of manual manipulation of the data, we have strengthened our internal controls. I believe XBRL would be perfect for ARRA (stimulus reporting) and TARP funding transparency as well.
In the United States, XBRL is currently being used by the Federal Financial Institutions Examination Council (FFIEC) which is composed of the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the National Credit Union Administration, the Office of the Comptroller of the Currency, and the Office of Thrift Supervision for bank calls reports of more than 7,500 US banks reporting to the government. http://www.xbrl.org/CaseStudies/FFEIC_XBRL_06.pdf Under the XBRL system, 100% of bank filings meet requirements for mathematical accuracy and 95% meet other quality requirements. The comparative figures under the old system were 30% and 66%. They have seen faster data inflow. Banks now file within hours of the start of a filing period rather than weeks later. This reflects the fact that they are now able to respond to reporting requirements more quickly and ensure data accuracy more easily. They have seen increased productivity. Each analyst can now cover 550-600 banks compared with 450-500 previously, an increase in productivity of about 20%, reflecting improved data quality and analytical capability. They have seen faster data access. Data is now available for use within a day of receipt, compared with several days under old, cumbersome validation processes. Quicker release enables faster and better informed decision making by agencies in protecting the public interest. They have also seen improved control of reporting XBRL enable changes in reporting requirements to be communicated and adjustments made by the reporting community within minutes or hours, compared with days or weeks under the old system which required significant manual intervention.
The US SEC has issued a rule in late December that 500 of the largest US companies will begin reporting their financial statements in XBRL standard starting June 15, 2009 to provide greater transparency and investor access to critical information driving our capital markets. http://www.sec.gov/rules/final/2009/33-9002.pdf
Why is it important?
The data can be tagged and sent to OMB's or Treasury’s sites for processing and also made available to the public on the Internet pursuing an e-government policy for better transparency and accountability. Today, each federal agency is asking for a certain type of reporting. If everybody reported to these agencies using XBRL standard they can pull the reports and take the specific data elements they need and put them into reports they need for oversight and accountability. This will elimante the need for different reports to be prepared by the States. This is what is being done in the Netherlands where one business reporting standard has been created using the XBRL standard.
As the US government looks at XML data standards it’s critical that these standards be developed in concert with all the players of the financial information supply chain in open collaboration. XBRL is an ideal business reporting standard that can help both states and federal agencies provide greater transparency and accountability. It is also consistent with the Obama Administration’s efforts to support an e-government platform to better empower citizens and supports greater transparency and accountability.
