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TechTalk Blog - US Government Mandates Machine-Readable Government Financial Reporting Using Data Standard Like XBRL For Better Data Analytics

By David Colgren posted 01-22-2019 09:40 AM


President Trump on January 14, 2019 signed into law the Foundations for Evidence-Based Policymaking (FEBP) Act (H.R. 4174S. 2046), which includes the Open, Public, Electronic, and Necessary (OPEN) Government Data Act (Title II). Strategic Finance Magazine published the following article I wrote on this topic in the February 2019 issue.

The Commission on Evidence-Based Policymaking issued this report on the benefits of using smart data and technologies like XBRL to enhance government services. Our very own IMA member and former IMA Chair - The Honorable Kim Wallin served on this commission and came up with recommendations for the US Congress in crafting legislation to implement the Evidenced-Based Policy Act. She has been one of the original supporters of using technologies like XBRL in the State of Nevada to provide better transparency and accountability for financial management of government. As the Former Controller of the State of Nevada - Kim understands the importance of how government services can be deployed more strategically using evidenced-based data - especially those most underserved or marginalized by society that need government assistance.   

With the signing into law of the Evidenced-Based Data Act -- it is clear -- a new era of digital financial reporting will be ushered in for federal, state and local government using the eXtensible Business Reporting Language (XBRL), Blockchain, Distributed Ledger and Smart Contacts. Management accountants across the country can play a strategic role in helping to build and utilize new technologies to support "Evidenced-Based Data Decision Making" with this new federal mandate. 

The new law will strengthen privacy protections, improving secure data access, and enhancing the government’s capacity to generate and use evidence in policymaking. The law also incorporated the OPEN Government Data Act, which requires all non-sensitive government data to be made available in machine-readable formats which includes financial data using global standards like XBRL. 


The 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.

Now with the Foundations for Evidence-Based Policymaking (FEBP) Act becoming law – efforts will be underway to deploy XBRL for Federal and possibly state and municipality financial reporting for better data analytics using a machine-readable format like XBRL using common accounting standards for financial reporting.


According to the US General Accounting Office (GAO) the federal government and public (via open government web sites) don’t know where more than $144 billion is being spent by the Federal Government in 2016 across the 24 federal agencies. 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 using evidenced-based reporting. The use of XBRL could also help federal agencies obtain audited financial opinions like public companies or small businesses.

Federal, state and municipal government entities spend trillions of dollars to pay for the military, schools, public works, libraries, roads, health services, public safety and government building.

These capital expenditures come from taxes that are directed to federal agencies for services via Congress but also come from revenues from agencies via fines, service fees, legal judgements. Several of these government agencies - like the Federal Reserve - use different accounting standards for financial reporting from other federal agencies. A few important agencies are government sponsored entities and revenues are derived from fees charged to regulate these entities to financially maintain these agencies. Right now, government financial reporting uses four different accounting standards to disclose information to the public: FASAB, GASB, USGAAP, and IPSAS.

This make financial reporting of public spending data - including statistical data released by these agencies such as the financial condition of industry sectors - difficult to consume and utilize by the public and business community to make better decisions.

Meaning evidence based data is not in a machine-readable format using one common accounting standard for government financial reporting to provide better data analytics to make evidenced based decisions.

As one of the largest democracies in the world -- public spending -- especially financial reports/budgets of federal agencies, state governments and municipalities/school districts – is important to be available to the public in a data format that is machine-readable, comparable and searchable for instant data analysis to make better business decisions (Evidence-based decision making) to run government and to support a growing capital markets. 


According to Reuters September 20, 2018 -- The size of the U.S. municipal bond market inched up to $3.853 trillion in the second quarter, from $3.851 trillion the quarter before, the Federal Reserve said in a report released on Thursday.

Households, or retail investors, held $1.625 trillion of debt sold by states, cities, schools and other muni issuers in the latest quarter…

Households, retail investors don’t have access to data held in their investment portfolios in a machine-readable format for data analytics.


Currently the Electronic Municipal Market Access system (EMMA) - supporting this $3.8 trillion marketplace - is made available to the public covering these investments located at

EMMA is operated by the Municipal Securities Rulemaking Board (MSRB). Currently this DATA IS NOT IN A MACHINE-READABLE format available for the public to use to make better investment decisions/ data analytics. It is in a format (PDF) that does not allow effective data analytics for individual data items disclosed within the PDF document. Consumers and regulators have to read hundreds of pages of PDF documents to find specific data elements. In fact, municipalities don’t submit their financial information in a machine-readable format to regulators for effective transparency and accountability.

But, on the flip-side, for the capital markets – public companies are requested to submit their financial information to the US Securities and Exchange Commission in a machine-readable format for instant data analytics using XBRL to detect fraud or financial irregularities.  

The US SEC EDGAR SYSTEM is using open, freely available data standards supporting XBRL so the public can look deeply into financial statements and footnotes and do effective data analytics for better investment decisions. 

Currently the MSRB has no plans to move the EMMA System forward using technologies such as XBRL to make municipal bond data more accessible and usable to the public for better data analytics. 

But now with the new Evidence-Based Policymaking (FEBP) Act (H.R. 4174S. 2046), which includes the Open, Public, Electronic, and Necessary (OPEN) Government Data Act (Title II) this could quickly change as both federal government agencies and soon to be -- municipalities will be required to submit their financials in a machine-readable format such as XBRL for better transparency and accountability.

 For most municipal bonds issued, the issuer is obligated to provide continuing disclosure to the marketplace, including annual financial information and notices of the occurrence of certain material events (including notices of defaults, rating downgrades, events of taxability, etc.) on the EMMA System. Yet this information is not in a machine-readable format for data analytics. It’s in PDF format that is extremely difficult for users of the information to discover and analyze. 

Why isn’t the MSRB's EMMA system supporting the $3.8 trillion municipal bond marketplace more transparent and accountable like the US Equities marketplace using the EDGAR System? Free and publicly-available, open data is critical in helping to bring capital from Main Street to Wall Street and support Democracy. Closed, for-a-fee systems available to the public -- like the current EMMA System under the MRSB - does not support the principles of state and local governments are obtaining funding to support the public interest.  

Over the years – comment letters from the public have been sent to the MSRB, GASB and US SEC asking that the EMMA System be updated using standards like XBRL to protect the public – but nothing has happened by the MSRB or by GASB to support the utilization of technologies like XBRL to make data contained in the EMMA System more accessible to the public:


There is lots of data within the municipal bond marketplace that should be open. This ensures a level playing field for everyone who can benefit. Yet, the EMMA System – unlike the US EDGAR System is locked and not in a machine-readable format for the public to access and use to make better investment decisions.


XBRL is a global standard developed to enhance transparency and accountability and this same standard can be used by the US municipal bond marketplace.

The XBRL standard is supported by more than 600 organizational members worldwide and is freely available and are an important part of the fabric of reporting used in more than 70 countries around the world, in use by well over 100 regulators, and used by more than 10 million private and public companies globally. Why can’t the municipal bond marketplace embrace this same global standard used in the capital markets to support better data transparency and accessibility?

Sixty percent of financial statement data is already being consumed electronically, and this figure will continue to grow, according to International Accounting Standards Board Chairman, Hans Hoogervorst. 

This same financial reporting standard used in the private sector can be leveraged over to the US municipal bond marketplace to create better transparency and accountability in this increasing complex marketplace to protect the public interest by making this data more accessible and in a machine-readable format for better data analytics.

But the MSRB and The Governmental Accounting Standards Board (GASB) currently have no plans to make data available in the EMMA System more transparent and usable to support the public interest. The GASB is subject to oversight by the Financial Accounting Foundation (FAF), which selects the members of the GASB and the Financial Accounting Standards Board, and it funds both organizations.[1] Its mission is also to establish and improve standards of state and local governmental accounting and financial reporting that will result in useful information for users of financial reports and guide and educate the public, including issuers, auditors, and users of those financial reports.[2] The GASB has issued Statements, Interpretations, Technical Bulletins, and Concept Statements defining GAAP for state and local governments since 1984. GAAP for the Federal government is defined by the Federal Accounting Standards Advisory Board.

Should GASB's mission include making disclosed data from state and local governments using the GASB standards more accessible to the public in a machine-readable format? 

As EDGAR ONLINE stated in its comment letter on September 9, 2008 so well:

"We believe that the lack of fundamental data and analysis in the municipal bond market represents one of the most significant risks to investors in the US market today. To solve this problem we believe that the MSRB and the SEC should require issuers to submit financial disclosures to the EMMA system in both electronic document format and in XBRL.

Access, consistency and quality of disclosures have been discussed by the SEC, the MSRB, and the participants in the municipal bond market many times over many years. However, there have always been questions of regulatory authority, technology accessibility, the challenges to developing reporting standards, and even questions of the cost/benefit for investors and the municipalities. What is different today is that we have a very clear and recent understanding of the impact of the lack of transparency in the bond markets. We have an investment climate that lacks confidence in its assets and the information the market is trading on. We have an internationally accepted open standard for financial reporting, and a thriving market providing low cost, high fidelity technology offerings for producing interactive data financial reports.

We believe that with the recent challenges in the bond and the bond insurance markets, the lack of consistent and detailed transparency puts investors and municipalities in a highly tenuous position and threatens the stability of this $2.5 trillion market. 

These conditions combined with political will can solve the information issues we have all been discussing for years – with a 21st century solution for 21st century investors. We encourage the SEC and the MSRB to respond to this opportunity by moving forward with the implementation of the EMMA system as described in the proposed rule and with an interactive data pilot for the municipal bond market."

Let's hope MSRB, GASB, the US Congress and state and local governments have the political will to move forward in modernizing their disclosure process to include technologies - such as XBRL - to make this disclosed financial data more accessible and transparent to protect the public interest.  


The 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.

Now with the Foundations for Evidence-Based Policymaking (FEBP) Act (H.R. 4174S. 2046), which includes the Open, Public, Electronic, and Necessary (OPEN) Government Data Act (Title II) becoming law – 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.

And now with the Foundations for Evidence-Based Policymaking (FEBP) Act this same model can be 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 non-financial information that companies disclose which also includes natural and human capital metrics to deal with better corporate governance topics such as climate change, diversity, gender pay, human trafficking and child labor in a supply chain.

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. 

As this important new federal law moves into implementation and we understand its ramifications related to government financial reporting change will come in both how government entities report and how systems capture and make this data available to the public on the Internet.

With change -- comes opportunity and many believe the new law (like the building of the first US Government backed transcontinental railroad) will open-up new technology innovations and new industries to support evidence-based reporting using machine-readable data for business reporting -- including financial reporting.