“A little revolution now and then is a good thing.” — Thomas Jefferson 
Our profession has a rare opportunity to start a revolution that can help regain trust in our financial markets and government and unleash the power of the people. The seeds of that revolution can be seen in two unlikely places for CPAs — Wired Magazine and The Huffington Post.
The revolution is about radical transparency, lower costs of government and business compliance, smart regulators, and an army of citizen regulators watching over the free markets and our governments (federal, state and local). The tools of that revolution are two of our favorite subjects here at CPA Success — XBRL and the Enhanced Business Reporting Consortium, both started by the AICPA,
Dan Roth offers us a great starting place in his “Wired Manifesto”:
Next, we can follow David Stephenson's advice and create smart regulation (is that an oxymoron?) using these same tools.
In his post, Recovery.gov: The First Step Toward Smart Regulation, W. David Stephenson sums it up like this: “If eventually adopted not just by Recovery.gov but agencies in general, such an approach could dramatically reduce companies' and local governments' reporting burdens; improve regulatory oversight by giving agencies simultaneous, real-time access to the same data; and, as a bonus, help improve organizations' efficiency.”
This is not rocket science. It is already working and using a proven technology and methodology! I know because I had the opportunity to meet Harm Jan van Burg (thanks to my XBRL mentors, Eric E. Cohen and Mike Willis at PwC) from the Ministry of Finance in the Netherlands, who has created the model of this new form of “smart regulation.”
Harm Jan led the Dutch Taxonomy Project, in which he helped save the Dutch government millions of euros and reduce the costs of compliance by businesses by $322 million annually. (For a country roughly three times the state of Maryland, that is not bad.) Australia estimates reduced costs of government burden of $800 million, New Zealand's estimate $55 million to $75 million. All of these are annual savings that recur year after year — an annuity that benefits both government and the people.
There are examples at the FDIC, and even two states (Nevada and Oregon) have implemented XBRL into Standardized Business Reporting projects to create transparency, accountability, and efficiency.
(Pictured: Eric E. Cohen, Harm Jan van Burg, and yours truly at the Rutgers World Continuous Reporting/Assurance Conference, October 2008)
Diane Mueller, vice chair of XBRL International, talks about the opportunity in her post Free the Data: eGov and Open Standards, in a plea to President Obama's newly appointed CIO, Vivek Kundra, to use XBRL in his efforts to democratize federal government information. She writes:
“When President Obama appointed his new federal CIO, Vivek Kundra, last week, Kundra announced ambitious plans to “democratize” federal government data by making it accessible in open formats and in data feeds. His plan calls for the creation of a single point of access to all public federal information. The idea is to enable the data to be accessed by developers whose applications will open up federal data to the sunlight of millions of citizens by encouraging them to scrutinize how the Recovery Act’s dollars will be spent.”
Vivek, if you are out there, please listen to Diane and the rest of us: What you are describing is XBRL.
Dennis Howlett over at the Accman blog says it well in his post recapping the latest developments in XBRL: “Whether Huffington Post can be regarded as a credible source for reporting on IT is another matter, but the fact the topic is entering the U.S. mainstream consciousness should be a wake up call to us all.”
“The time to act is now,” writes Dan Roth. “An exhaustive study by the Transparency Policy Project at Harvard University's John F. Kennedy School of Government — analyzing disclosure rules for everything from restaurant cleanliness to SUV rollover risk — found that there's a very brief window after any calamity for government to institute changes. (Wait too long and the special interests start regaining their confidence and pushing back.) In the financial world, the old order is still trying to find its new shape. So the window is, briefly, cracked. Caveat vendor.”
But revolutions are not easy. Howlett offers this warning: “XBRL creates new opportunities but making the best of them requires new thinking. So far, the profession has shown itself to be occasionally opportunistic but not radical in the way it assists clients.” I think it is time we get a little radical.
I encourage you to read the full article, “Road Map For Financial Recovery: Radical Transparency Now!” by Wired Magazine senior writer Daniel Roth and W. David Stephenson's post “Recovery.gov:The FIrst Step Toward Smart Regulation.”
What do you think? Is it time for a revolution?
If so, I hope you will join us on June 16 at our Maryland Business and Accounting Expo, where we will continue this conversation with thought leaders from XBRL and EBRC. Who knows? Maybe it can be the start of the revolution.
Resources:
- XBRL and Public Sector Reporting Study, by the AGA
- Enhanced Business Reporting: It's Time has Come, featuring a podcast with EBRC founding member Bob Laux, CPA, of Microsoft and his presentation in Second Life (Bob will be speaking at the Expo)
- Lessons from the XBRL frontlines, a post featuring Maryland CPA Ken Kelly and his work at McCormick on XBRL (Ken will also be at the Expo)
- Virtual workshop examines reality of XBRL, featuring a presentation by Eric E. Cohen and Mike WIllis of PwC, who also will be at the Expo)