Last month, Florida Gov. Rick Scott signed a measure that will convert local government financial audits across the state from PDF documents to machine-readable formats beginning in 2022.
This geeky reform has the potential to radically increase what we know about municipal finances in the Sunshine State.
Each year, hundreds of Florida local governments produce Basic Financial Statements or more extensive Comprehensive Annual Financial Reports (CAFRs), which are often hundreds of pages long. Although this information is hiding in plain sight, few people have the time and resources to locate and tabulate the voluminous amount of information available on all Florida counties, cities, school districts and special districts.
Once converted to electronic form using eXtensible Business Reporting Language (XBRL), these statements will provide readily-accessible details of municipal revenues, expenditures, assets and liabilities based on accrual accounting. That means reporters, researchers and others will have access to an online database containing this information, creating much greater transparency in local government finances and debt.
State and local governments have mounds of valuable data, but the technology is so far behind that organizations either can’t or won’t mine the lengthy PDFs published by the tens of thousands of local governments nationwide that report this data each year. Moving to XBRL is a huge step in permanently converting valuable data to a format that organizations can actually capitalize on for a variety of purposes.
Rachel Carpenter, co-founder of fintech startup Intrinio, which aggregates financial data, recognizes the significance of the policy change. “We have failed at the federal level to implement municipal transparency for over a decade. It’s encouraging to see movement at the state level and it is my hope other states will follow suit.” Indeed, Florida may be a leader on this issue in the coming years.
Charlie Hoffman, considered by many as the “father” of XBRL, shares his enthusiasm about Florida’s courageous decision to be the first state to implement this policy. “What the Reason Foundation and Florida are doing has inspired me to try and get my state, Washington, which was where XBRL began, to do the same thing.” Hoffman calls Florida’s move a “new era” in financial reporting and data.
Dr. Jacqueline Reck, an accounting professor at the University of South Florida, summed it up best: “As a resident of Florida, a government researcher and a strong advocate for greater accessibility of government financial data, I am excited to have Florida be the leader in the nation when it comes to the adoption of XBRL reporting for government. This first move by the State of Florida will help expedite the adoption of more transparent and accessible financial reporting by municipal governments, something long advocated by creditors, investors and the SEC.”
Marc Joffe is the Senior Policy Analyst at the Reason Foundation, a libertarian think tank. Spence Purnell is a policy analyst at the Reason Foundation. Sal Nuzzo is vice president of policy at The James Madison Institute, a free-market think tank in Tallahassee.
Article: http://www.heraldtribune.com/opinion/20180413/another-viewpoint-florida-takes-lead-in-local-government-financial-transparency
