California Moves Towards State Level XBRL
California could be on their way to join Florida in leading America’s state and local government towards transparent, easily accessed financial statements. The Open Financial Statement’s Act, SB 598, which has passed in the Senate and is soon to go to Senate Assembly, is the latest in a long trail of small steps towards local government transparency.
The Sunlight Foundation have published a post by Marc Joffe, Senior Policy Analyst at the Reason Foundation, outlining the progress that has been made towards transparent, machine-readable local government financial reports in the US.
Audited financial statements contain a lot of useful information – not least, government revenues, expenditures and debt levels, looming liabilities and issues like litigation and information on federal grants. However, despite how much useful data is contained in state financial statements, and despite the work of transparency advocates, they remain difficult to access and analyse, locked in PDF form. For true transparency, state and local financial statements need to be migrated to machine-readable format (like Inline XBRL).
Progress is, however, being made. In 2018 Florida passed HB 1073, which has kicked off the development of an XBRL taxonomy with the intention of adopting the standard by 2022. If it passes the state assembly, the new California bill would create a commission to study this concept and potentially develop a taxonomy.
Local and state governments are facing immense challenges surrounding public infrastructure, retirement costs and more. Citizens, investors and researchers have a right to ask questions about their municipal governments. and, as Marc says: ‘Big data can help answer these questions; opaque PDFs scattered around the web cannot.’ Instead, the US should have a repository of easily accessed, comparable, machine-readable state and local data.
So should the rest of the world! (Pro Tip: Spain has been collecting municipal financials in XBRL format for years)
Read more here.