TechTalk Blog -- NEW LEGISLATION INTRODUCED IN CONGRESS TO MOVE XBRL ACROSS ALL US FEDERAL FINANCIAL AGENCIES FOR BUSINESS REPORTING

By David Colgren posted 03-22-2017 07:59 AM

  

Great article in Fed Scoop about new legislation being introduced in Congress that would take the XBRL global data standard -- created by the accounting profession -- and build-out across all federal financial agencies for better transparency and accountability.

Using the machine-readable, human-readable data format -- companies can create “one report” of information that can be shared across stakeholders – including regulators for more effective distribution of critical information driving investment in the capital markets.

Congressman Issa issued the following press release about “The Financial Transparency Act” he and other Congressmen on both sides of the isle have introduced in the new Congress.

From the article:

“The Financial Transparency Act, reintroduced by Rep. Darrell Issa, R-Calif., this week, would eliminate document-based financial filings. The eight major financial regulatory agencies would have to compile information already received under certain banking and securities laws into common data fields, and make other published information electronically searchable and downloadable without restriction.

The Treasury Department would also adopt data standards that reach across agencies and the Securities and Exchange Commission would replace its current financial statement reporting format with a single XBRL filing.”

This same XBRL data format is being deployed across the federal government for contract and grant making under the DATA ACT approved unanimously by the US Congress in 2016. Efforts are underway to deploy XBRL for Federal financial reporting since – according to the General Accounting Office (GAO) we don’t know where more than $144 billion is being spent by the Federal Government in 2016. The use of XBRL across federal financial reporting can help US government agencies report how taxpayer funds are being spent potentially linked to performance for better government.  

Countries like Australia and the Netherlands are using XBRL for a “Standard Business Report” that companies are disclosing that is shared across stock exchanges, regulators and investors. It looks like Congressman Issa and other members of Congress from both parties would like the same model to apply to make businesses competitive and reduce regulatory reporting burden. More than 2/3 of the world’s capital markets are using XBRL for better financial statement reporting by public companies.

With the XBRL global data standard – data reported by a company can be pulled off the Internet and put into Excel or business models for instant analysis without re-keying data.

Efforts are underway to use XBRL for nonfinancial information that companies disclose which also includes natural and human capital metrics to deal with better corporate governance topics such as global warming, diversity, human trafficking and child labor.

The IMA supports the build-out of XBRL because it allows management accountants to move away from keying data into Excel spreadsheets and move to data analytics – predictive analytics for companies they serve.

Ms. Liv Watson, IMA member and senior executive at Workiva is known as the “Mother of XBRL”. She has worked tirelessly behind the scenes to gain support and adoption of XBRL global data standard by the accounting profession to support the management accountant. Ms. Watson serves on the IMA’s Technology Solutions Practices Committee and has been an IMA for more than 25 years. Ms. Watson has written a book about XBRL called, “XBRL for Dummies” with Charles Hoffman the “Father of XBRL" that discusses the history and use of the data standard in the United States and abroad. Today -- more than 35 countries are using XBRL for business reporting and analysis. We are grateful for Liv's continued efforts to drive adoption of XBRL to assist management accountants. 

Governments, investors, bankers, and lawyers spend huge amounts of money and time looking for relevant business/financial data to make decisions – XBRL transforms both financial and critical business information into a machine-readable format linked to accounting rules that allows search engines on the Internet to better obtain and analyze vast amounts of information for instant review.

With the move to the global IFRS accounting standard linked to XBRL we can -- one day have a public company issue an IFRS financial statement tagged in XBRL that can be consumed by stakeholders around the world including leading stock exchanges. Today, public companies have to issue country specific financial statements instead of one financial report using one accounting standard. This is extremely expensive to public companies and to the investment community that has to import and review across different accounting frameworks. Having one accounting standard -- IFRS linked to XBRL -- regulatory burden could be significantly reduced by having one report in one accounting standard using one data standard. Congressman Issa's legislation moves the world of accounting and regulatory reporting in this direction...    

Stay tuned as this important legislation moves forward.



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