Update from Washington: the DATA Act and Congressional action on XBRL
This month we will look at the recent developments in Washington, D.C. regarding the DATA Act and congressional developments on XBRL. First, let’s look at the DATA Act.
The Digital Accountability and Transparency Act DATA ACT
Background
With support from both houses of congress, the Digital Accountability and Transparency Act of 2014 (DATA Act) (P.L. 113-101) was signed into law by President Obama in May of 2014. According to USA Spending, the DATA act “will make Federal spending data more accessible, searchable, and reliable. It will not only make it easier to understand how the Federal government spends taxpayer dollars but will also serve as a tool for better oversight, data-centric decision-making, and innovation both inside and outside of government. The U.S. Department of the Treasury (Treasury) and the Office of Management and Budget (OMB) are leading the government-wide implementation of the DATA Act.” (Source: USA Spending.gov )
As remarkable as it was to get a bill supported by both parties passed into law, the DATA Act still has a long ways to go. In the bill, several provisions specifically called for inter-agency cooperation and collaboration in the implementation. A four step implementation process includes:
- Establishing a common technology using data standards to be used by all (Done)
- Creating a standard data exchange (Done)
- Developing a working pilot program (In progress)
- Collaboration (Visit the active collaboration space here )
Even though most of the key elements of the bill have been implemented or are soon to be implemented the issue of support from the OMB remains.
The Current Issue
Although the implementation of the Data Act appears to be progressing according to schedule, one major hurdle exists. The main partners in the implementation coalition, Department of the Treasury (Treasury) and the Office of Management and Budget (OMB), are committed to progress with one huge exception. The OMB, as of the latest budget draft from the Obama Administration, has not funded activities related to the implementation of the DATA Act.
According to Christian Hoener from the Data Coalition reporting on the Data Coalition blog:
“Judging from budget requests, the Treasury Department remains animated with a bold vision to transform federal spending from disconnected documents into standardized, fully-searchable data. But OMB’s budget requests suggest it still fails to prioritize DATA Act implementation on par with other competing information technology and financial management priorities.
Specifically, in the Executive Office of the President’s budget request, the OMB Office of Federal Financial Management requested flat funding at $3 million and makes no specific reference to the DATA Act, despite this office’s central role supporting “effective and transparent use of Federal financial resources by improving the quality, utility, and transparency of financial information” (see pg. 1163). Additionally, OMB’s Information Technology Oversight and Reform activities saw a $5 million requested increase (over $30 million FY16) for various federal IT improvement projects (E.G., IT improvements, FITARA implementation, USDS expansion, and cybersecurity). Yet again, there is no mention of DATA Act work.”
The future of actual data transparency could hang in the balance. Without the proper emphasis and support in the proposed funding, the implementation of the DATA Act may suffer. Stay tuned for further developments.
Small Company Disclosure Simplification (H.R. 1675)
According to the Data Coalition’s February 3, 2016 update, H.R. 1675 is progressing but it’s about to hit a major roadblock. As you will recall from our previous blog , Sponsor Rep. Robert Hurt’s bill would require the SEC to “exempt most public companies from reporting their financial statements in the eXtensible Business Reporting Language (XBRL) format”. (Source: Data Coalition Website)
The House of Representatives latest vote on H.R 1675 allowed amendments to the bill in an effort to test support and passage. The most recent vote included an amendment proposed by Republican Darrell Issa to “reduce the scope of the Small Company Disclosure Simplification Act to exempt only newly-public companies, but it failed by a narrow 221-194 margin, with scores of Democrats and 21 Republicans” voting for the measure. A second amendment also failed. This means that the bill remains intact in the House of Representatives.
White House Opposition to H.R. 1675
The Obama administration (Office of Management and Budget) made a very clear statement in opposition to HR 1675 threating a veto if the bill passed both houses and was presented to the President. From the report:
“The Administration strongly opposes H.R. 1675. Among other flaws, this bill includes several provisions that pose risks to investors, are overly broad, allow financial institutions to avoid appropriate oversight, and are duplicative of existing administrative authorities. Open data disclosure systems benefit investors, issuers, and the public increasing transparency of publicly traded companies by making their filings more easily accessible.
Additionally, Title IV, entitled Small Company Disclosure Simplification, would exempt certain publicly traded companies from requirements to file machine-readable financial statements. Open data disclosure systems benefit investors, issuers, and the public, increasing transparency of publicly traded companies by making their filings more easily accessible. Impeding regulators’ ability to use 21st century technological tools to regulate markets and protect investors is contrary to the SEC’s mission.”
Given the level of opposition to H.R. 1675, a threat of a Presidential veto should effectively kill the bill until 2017. Industry participants such as DataTracks and the Data Coalition will continue efforts to peel back support for this bill. Again, stayed tuned to this blog for further developments.
About DataTracks: DataTracks US is part of DataTracks Services Limited, leaders worldwide in preparation of financial statements in EDGAR HTML, XBRL and iXBRL formats for filing with regulators. With a track record of over 10 years, DataTracks prepares more than 12,000 XBRL statements annually for filing with regulators such as SEC in the United States, HMRC in the United Kingdom, Revenue in Ireland, ACRA in Singapore and MCA in India.
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