The federal government has come to some hard truths about its financial data.
- It's wildly inaccurate.
- The ways in which it's reported are horribly inefficient.
- Citizens can't trust that they're getting accurate, transparent data from their government until both problems are fixed.
Give the government credit, though. It's trying really hard to do just that.
On Sept. 30, President Obama signed into law the Children and Family Services Innovation and Improvement Act. A provision in that law requires the Department of Health and Human Services to designate common data reporting standards to govern the reports that states submit outlining how they spend federal child welfare funds.
In short, the government has just standardized the reporting process for states that receive federal funds for child welfare programs — and that standarization will likely look a lot like XBRL.
That's one small step toward accurate data.
The giant leap, though, might be yet to come.
There's a piece of legislation moving through Congress right now called the Digital Accountability and Transparency Act, or DATA Act. That bill calls for the creation of an independent body that would track all federal spending on a single website and require the use of consistent government-wide data standards.
Here's why the DATA Act is a big deal:
Current government spending is reported to databases that feed into the website USAspending.gov. That site “is “plagued with accuracy problems and problems with completeness,” says Hudson Hollister. “The reason for that is (government) agencies' inability to get their IT systems to talk with one another.”
Hollister is legal counsel for House Committee on Oversight and Government Reform, whose chair, Rep. Darrell Issa, R-California, is sponsor of the DATA Act.
According to Hollister, $80 billion is spent annually on federal government IT, but only 34 percent of the data found on USAspending.gov is believed to be accurate.
“It should be possible,” says Hollister, “for citizens, watchdog groups, media, and even the appropriators in Congress to use all of this spending data to judge whether government is working for them or not.”
The solution, he and Issa believe, is a single platform for federal spending information, driven by a consistent, government-wide set of data reporting standards.
Sound familiar, XBRL fans?
“The DATA Act does not require the use of XBRL per se,” Hollister stressed. “It does require the designation of a reporting standard that has many of the characteristics of XBRL, and to be blunt, I think XBRL would be the standard that will be selected.”
It's nice to see the federal government finally catching up to what the profession and data guru David Stephenson have been saying for years: XBRL has the power to transform our financial world.
And CPAs? They have an important role to play in all of this as well, says Hollister.
“CPAs are to be commended for being impartial in most circumstances — in business and policy decisions, for instance,” he said. “In this case, CPAs can be advocates for the accuracy and efficiency that structured data can bring.”
In other words, let the numbers speak for themselves — and let us help create the standards that help numbers do just that.
Any questions about XBRL's relevance?
Listen to Hollister's comments in their entirety in this MACPA interview.
Want to learn more?
These MACPA programs offer more details about the future of data:
- What Small Public Companies Need to Know About the New XBRL: This webcast is led by XBRL co-founder Eric Cohen, CPA. It's available on the following days: Oct. 20 | Nov. 18 | Dec. 19 | Jan. 19 | Feb. 22 | March 22 | April 24 | May 24
- XBRL and the New Era in Financial Reporting: Moving Beyond Theory: A live, 8-hour program on Jan. 13 in Towson