Digital Financial Reporting

Here is a link to a web page provided by the state of Texas.  The web page contains links to the financial reports of a number of the larger cities in Texas.  You can go to this web page, click on a link, and go read a financial report in the form of a PDF file.

The financial report is called a CAFR (Comprehensive Annual Financial Report).  I don't know the exact rules, but I believe it is the case that the approximately 88,000 state and local governmental entities within the United States are required to file this report annually with the US Census Bureau.

The state of Oregon undertook a project to experiment with expressing this CAFR report in an XBRL format.  You can obtain a copy of that study here.

Try and do a comparison of, oh let's say three different Texas cities using those PDF files.  Can it be done?  Absolutely.  All one needs to do is rekey the information.

The web page has a title "Transparency by Texas Cities".  You can clearly see how XBRL can contribute to transparency by making it vastly easier to get at the information within these types of PDF based financial reports.

Imagine if the financial information of all 88,000 state and local governmental entities were put into the type of system the SEC has created for public company financial information, their new IDEA system.  Here is a prototype of how using this information could work.

That would dramatically increase transparency!  Imagine the analysis which could be done, how the information could be used by economists and academics for all sorts of things, and imagine the view voters could have into the governments which spend their money.

Financial information of the agencies and departments of the US Federal Government could also be made available in this manner.

An article published by Government Technology, XBRL Ends Spreadsheet Hell, explains how XBRL ended spreadsheet hell for a department within the state of Nevada.  Kim Wallin, Nevada's controller says:

 "The goals were timely and accurate data, stronger internal controls, reduced costs, a standardized system of seamless data exchange, business processes and data elements. XBRL met all of those goals."

The article discusses two projects where XBRL was used to supplement what had been done with spreadsheets alone.  One project related to the tracking of grants and the other relating to debt collection.

In addition, the article says XBRL would be an "excellent enhancement" to a SOA (service oriented architecture, basically web services) business portal Nevada is looking at developing.

Imagine if every US state created an SOA business portal, as well as the US federal government! Or heck, every country creates an SOA portal.  Imagine both the efficiency of such a system and the transparency which could be offered to the voters to keep tabs on government spending.  Imagine the data economists could have to populate their economic models.