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XBRL: Is the US Government Ready?

May 22, 2009

California congressman Darrell Issa, the ranking Republican on the House Committee on Oversight and Government Reform, proposed legislation on May 15, 2009 that would extend the use of XBRL (eXtensible Business Reporting Language) as a standard data format for financial documents. All federal agencies that require corporate reporting would begin to accept reports in XBRL format. The proposed Bill would require implementation of XBRL Government reporting within one year.

The Securities and Exchange Commission (SEC) has already mandated that SEC filers begin using XBRL to file quarterly and annual statements beginning with the largest filers in 2009 followed by accelerated filers and all remaining filers in 2010 and 2011, respectively. Congressman Issa’s proposed law would require the federal government to “standardize the collection, analysis, and dissemination of business and financial information,” through the use of XBRL, “to the maximum extent practicable.”

The reason Issa gave for his proposed XBRL bill own effort was to allow the government and the public to monitor TARP recipients’ use of the bailout funds and to value their toxic assets. Issa said “The technology exists to create real transparency to allow us to track TARP dollars and value toxic assets, but the Federal government is far behind the curve in implementing available solutions”.

The legislation has the potential to affect far more than TARP reporting. Representative Carolyn Moyer said “applying XBRL across all kinds of asset classes — mortgage-backed securities, municipal bonds, securitized debt, whatever — as well as proxy statements and corporate actions, is a much bigger effort than just how you’re using TARP funds”.

XBRL is the global standard for the exchange of business reporting through the internet. Regulators around the world are adopting XBRL in a rapid pace. It provides major benefits in the preparation, analysis and communication of information. It offers cost savings, greater efficiency and improved accuracy and reliability to all those involved in supplying or using financial data. XBRL is being developed by an international non-profit consortium of approximately 450 major companies, organizations and government agencies. XBRL is an open standard, free of license fees.

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