The California Assembly passed a bill earlier this month that will set their state on the path to machine-readable reporting.
The Bill (Senate Bill 598), which passed by a 64-0 vote, calls for the enactment of the Open Financial Statements Act, which would establish the Open Financial Statement Commission, consisting of 9 members, in the Treasurer’s office. The commission will be tasked with the building of one or more taxonomies suitable for public agency financial filings and with the creation, by contracted vendors, of a software tool that enables a public agency to easily create machine-readable documents consistent with these taxonomies.
The bill requires the commission, by January 1, 2021, to make recommendations regarding how and whether to transition financial reporting by state and local agencies to machine-readable format.
California’s counties, cities, school districts, special districts, and pension funds prepare at least two sets of annual financial reports. They send unaudited data to the state controller, who publishes it after a significant time lag. These entities also prepare audited financial statements in the form of PDF documents to comply with state and federal single audit requirements and for use by municipal bond investors. Financial data in PDF format is difficult for users to analyze and process. The approved legislation would simplify the financial reporting format and make it machine-readable, thereby making audited state and local government financial data more accessible, more transparent, and easier to analyze.
We at IRIS applaud all efforts to make financial data more accessible and transparent and look forward to more local governments transitioning over time from paper to machine-readable financial reporting.