Yesterday afternoon, the Senate passed S.994, the Digital Accountability and Transparency Act (DATA) of 2014. This is a bill to expand the Federal Funding Accountability and Transparency Act of 2006, increasing the accountability and transparency in Federal spending.
You can read the bill here: http://thomas.loc.gov/cgi-bin/bdquery/z?d113:SN00994:@@@L&summ2=m&
From the bill:
…include data reporting standards that…
(I) incorporate a widely accepted, nonproprietary, searchable, platform-independent computer-readable format;
(II) be consistent with and implement applicable accounting principles;
(III) be capable of being continually upgraded as necessary;
(IV) are structured to specifically support the reporting of financial and performance-related data, such as that any data produced, regardless of reporting need or software used for creation or consumption, is consistent and comparable across reporting situations;
(V) establish, for each data point, a standard method of conveying the reporting period, reporting entity, unit of measure, and other associated attributes; and
(VI) incorporate nonproprietary standards in effect on the date of enactment of the Digital Accountability and Transparency Act of 2013.
Why we care about the DATA Act:
Even though it is not identified, we’re talking about XBRL. The bit about “computer-readable format” was the clue. What’s important to take away (and appreciate) is that XBRL is not a proprietary reporting process created by the SEC to torture us all in the capital markets. It’s a universal electronic language for ALL financial information. XBRL is also – and this is very core – a culture of accounting accountability.
In an odd juxtaposition, the passing of the DATA Act is the Ying to the Yang of another bill: the Small Company Disclosure Simplification Act, a bill that lobbies for more than half of the companies on US exchanges to stop filing in XBRL. (aka: to revert back to manual spreadsheets and PDFs)
Granted, XBRL has not been the smoothest nor simplest SEC regulation to follow. Nor is it free. XBRL US, the consortium whose charge is to support the implementation of XBRL, puts fees at $2,000 to $25,000 per year depending on the commercial solution and the complexity of the financials. Our fees are on the low-end of that spectrum – thanks to our fleXBRL program.
The new discussions, in light of the DATA Act passing, are what will the new bill do on The Hill? Does accounting accountability play favorites? Does this mean investors should mistrust large companies more than small? Can the capital markets really be just “half compliant” in regard to equity financial fundamentals data?
Regardless if the bill passes or dies on The Hill, we urge emerging growth companies to shop better. XBRL should not be a fiscal concern. We help hundreds of companies throughout their IPO process and into the post-IPO life. We understand that being transparent and compliant are the costs of going public… and we “sell” services that can easily (and fairly) work for all companies, small or otherwise. Size doesn’t matter.
Have a great day.