Transparency, the easy way
The United States 2011 federal budget currently stands at $3.82 trillion. Tracking how this money will be spent and reporting back to taxpayers is a daunting task. Previous administrations have tried to monitor spending, but none have been able to achieve any true level of transparency due to the number of entities involved, the numerous proprietary data formats and an overall lack of interoperability.
President Obama is committed to an open government, saying that his office would “disclose information rapidly in forms that the public can readily find and use.” But unlike those before him, President Obama has a real chance at providing taxpayers with the information they deserve and expect from Washington. That’s because today, eXtensible Business Reporting Language (XBRL) offers a new method of electronic communication that makes data easily accessible and trackable.
In the simplest terms, XBRL provides a tag for every piece of data. For example, each line item within the U.S. Department of Transportation budget would have its own unique tag instead of treating the entire budget as a block of text like in a printed document or webpage. Tagging specific pieces of information allows it to be easily read by computers and opens up a completely new way of utilizing data.
“Computers can identify the information in an XBRL document, select it, analyze it, store it, exchange it with other computers and present it automatically in a variety of ways for users. XBRL greatly increases the speed of handling of financial data, reduces the chance of error and permits automatic checking of information.” (www.XBRL.org)
XBRL is quickly becoming the reporting standard for businesses around the world. More than 40 countries are already using XBRL to disclose unrestricted information and, in 2009, the U.S. Securities and Exchange Commission (SEC) mandated that all public companies submit their financial filings in XBRL format. This has allowed anyone interested in public financial data, such as investors, analysts, financial institutions and even everyday citizens, to easily locate, compare and analyze data. Of course, the usefulness of XBRL can only be fully realized when all pertinent data is correctly translated into the XBRL format.
The Government Information Transparency Act
Introduced in June 2009 by California GOP Rep. Darrell Issa, the Government Information Transparency Act seeks to make spending transparent by requiring government information to be presented in XBRL. According to Rep. Issa, “If passed, this act would greatly simplify and standardize the collection, analysis and dissemination of business information collected by federal agencies.” By requiring the federal government to tag financial information in XBRL, the general public will have access to accurate and up-to-date information on how their money is being used (http//issa.house.gov). While some federal agencies such as the SEC and the FDIC are already using XBRL, this legislation would compel other departments to follow their lead.
Last year, the U.S. Congressional Committee on Oversight and Government Reform assembled for an educational presentation on using XBRL to access and analyze data. The purpose was to more fully understand how XBRL can assist in providing greater data transparency to the general public as well as help the committee perform its oversight responsibilities. During the presentation Rivet Software executives demonstrated the potential of XBRL to improve supervision of governmental activities including recovery act spending, financial crisis investigations, and government contract management.
Beyond the Border Analysis
A desire to track government spending and financial activity, whether by the general public or by elected officials, is currently pushing XBRL adoption throughout the US government. Interestingly, it was a similar need for financial transparency that drove the acceptance of XBRL within the business community as well. However, both of these applications are just the first step in harnessing the power of XBRL. Tagging data in XBRL allows it to be aggregated in different formats for comparisons across companies, industries and even countries. Imagine the benefits of comparing the health of one international banking system to another based on actual data; or contrasting the value of specific assets by country.
XBRL can not only make data accessible, it can elevate the usefulness of information to deliver true transparency on multiple levels. Where it’s a macro view of multi-country comparisons or the micro view of spending conducted under the US Recovery Act, standard-based data makes it possible to finally provide all users with the knowledge and power they need to make informed decisions.