The AGA Weblog

Deepening the Value of HR 2392—The Proposed Government Information Transparency Act

By: Sunil Datt, MS, MBA, MA, CGFM, PMP

Sunil Datt, MS, MBA, MA, CGFM, PMP, is Senior Managing Consultant, IBM Global Business Services.

The bill may pass, or it may not pass; but it remains a good first effort to introduce efficiency and effectiveness in the process of reporting to government agencies. The efficiency of a reporting process may be said to lie in two things: minimizing the burden of reporting, and standardizing formats and processes so that data flows seamlessly from reporting entity to collecting entity, and then back to consumers. The effectiveness may be said to lie in the collection of the ‘right’ data and then producing meaningful feedback loops of aggregated information for different sets of consumers.

HR 2392, in its primary purpose provides “to the maximum extent practicable, for the Federal Government to standardize the collection, analysis, and dissemination of business and financial information regarding business activities of companies through the use of a single data standard known as eXtensible Business Reporting Language.” In that, the bill is looking at one of the elements of efficiency—standardization, and suggesting the use of eXtensible Business Reporting Language (XBRL) as the standard. However, the other element, reducing the actual reporting burden, is equally worthy of attention, and there are several good examples of how this is being attempted elsewhere in the world. No doubt, the Paperwork Reduction Act, 1995, sets out to comprehensively limit the collection of new information from individuals and businesses, but it is also time to comprehensively review what is being collected, and the efficiencies that can be achieved through the capabilities of new technologies and a standard like XBRL.

One major example of such reduction being implemented is in Australia—the Standard Business Reporting (SBR) project. SBR is a multi-agency initiative that will simplify business-to-government reporting by:

·      making forms easier to understand

·      using accounting/record keeping software to automatically pre-fill government forms and

·      introducing a single secure way to interact on-line with participating agencies.

As a result, businesses and their intermediaries will have a faster, more efficient reporting mechanism. Key benefits to business will include:

·      reduced time and effort spent preparing reports for government by businesses, accountants and bookkeepers

·      reduced time and effort spent filing reports for government and

·      reduced time and effort spent dealing with errors.

SBR is expected to save Australian businesses $795 million per year on an ongoing basis, freeing up resources for more profitable activities. In addition, accountants, bookkeepers, tax professionals and software developers will have access to a powerful system for improving service delivery and productivity.

There are benefits to be had all round: benefits to the economy, government, businesses, software developers and benefits to other intermediaries. See details at www.sbr.gov.au

The Netherlands is another country which is leading the way on the use of XBRL and International Financial Reporting Standards (IFRS) in order to implement a national business financial reporting taxonomy or Standard Business Reporting. Since January 2007, Dutch companies and financial institutions have been able to report their financial data to dozens of Dutch government authorities using the XBRL-tagged data. This XBRL project is expected to save reporting companies 25% of their compliance costs. It has already succeeded in reducing the number of reporting elements that companies have to keep record of from 200,000 to 4,500.

Back at home, the Federal Deposit Insurance Corporation (FDIC) has been collecting quarterly call reports data in XBRL format from 8200 banks since 2006. The Securities and Exchange Commission (SEC) has now mandated that the largest 500 corporations using U.S. GAAP would have to file their 10K and 10Q returns in XBRL format from June 2009. Down the road will come other corporations, those filing in IFRS, and mutual funds filing their risk-return reports to the SEC. HR 2392 would expand this to all government agencies. But none of this will ensure the reduction/simplification of the filing burden on businesses and individuals; nor will XBRL ensure the collection of the ‘right’ information. That is why, HR 2392 needs to be deepened to include this requirement. The bill does provide that OMB establish guidance in the form of best practices to accomplish the purposes set out in section (a) (quoted above in para 2). But that still limits best practices to the collection, dissemination and analysis of data using XBRL. Therefore, it is best to add this requirement in the bill itself, thereby not leaving to chance a very important benefit that can be achieved right now, rather than in piece-meal fashion.

Grants Management: Is Effective Management Possible?

By: Anna D. Gowans Miller, MBA, CPA

Anna D. Gowans Miller, MBA, CPA, is AGA’s Director of Research.

The AGA Corporate Partner Advisory Group (CPAG) Research Program chooses projects that are likely to provide helpful guidance to all levels of government—federal, state and local. One of our recent research efforts, conducted by AGA in-house with support from Corporate Partner BearingPoint, Grants Management: How XBRL Can Help, described the current state of grants management. Here is a quote from the conclusion of the report:

“Grants are a major conduit whereby the federal government provides funds to states and other recipients. The situation today is difficult for recipients because they have to manage multiple requirements, often for very similar grant programs, and there is no streamlined process for reporting the progress to the federal agency or agencies…. Too often, agencies focus on getting the money out and put less priority on the back-office work of promptly reconciling grantee reported data with agency records, ensuring that grantee performance is adequate and properly reported, that grants are closed out properly and that any unspent money is returned to the Treasury and [made] available for other use.”

And now we have the American Reinvestment and Recovery Act of 2009, signed into law on Feb. 17, that is going to push more money out to recipients, most of it through grant mechanisms, than ever before and do this as fast as possible. If the process was strained before, imagine what it will be like for both recipients and grantors, with more reporting requirements and more almost real-time transparency requirements than ever before. If they could not do well before, are they even going to be able to cope now?

States, local communities and other grantees are going to experience a torrential influx of funds. And these funds come with onerous reporting requirements. The American Reinvestment and Recovery Act requires reporting on amounts received, projects or activities for which the funds are to be used, estimated numbers of jobs created or retained and information regarding subcontracts and subgrants. With such a plethora of reporting requirements, grantors and grantees will have to try to use recent technological developments to help them keep up. 

One of these, described in the AGA Research Report mentioned above and available online, is XBRL— Extensible Business Reporting Language. Based on XML and HTML, XBRL is a way of tagging data with relevant associated information that stay with the data as they move up the grants reporting supply chain. The data and associated information can then be sliced and diced in any number of analytic ways. Program performance can be analyzed over different geographic regions (even congressional districts). Comparisons can be made across programs. And the data retains its integrity, making verification and validation much easier. It would seem to be the way to go to make life easier for everyone involved in the grants-making process, for grantors and grantees alike. 

Why are we not doing it? Let us hear what you think. Tell us your opinions on XBRL, or give us an alternative solution.