One way of lowering the tone of rhetoric on political issues would be to make it more fact-based.
If the White House wants to try to find any kind of common ground with Rep. Issa and his Committee on Oversight and Government Reform Investigations, and to achieve its own goal of paring federal spending, it would do well to support one of Issa's pet projects, passage of S. 303, the Federal Financial Assistance Management Improvement Act.
That bill, which enjoys bipartisan support, died in the last Congress when a conference committee could not reconcile Senate and House versions. It would require all government agencies to adopt a uniform financial data standard for both their internal financial information and whatever financial info they collected from the private sector in regulatory filings.
Why is that important? Today, there's a wide range of reporting software and procedures which mean that it becomes difficult, if not impossible, to quickly and easily either find out whether a government agency is efficient or to make the information that companies have to report to government easily understood and scrutinized.
While it wasn't named, most believe the best "standard" for reporting under S. 303 would be the eXtensible Business Reporting Language (XBRL). It has the potential to not only cut government waste and inefficiency, but to help businesses make better decisions and cut their supply chain waste, among other benefits. The US lags behind the rest of the world in widespread implementation of XBRL.
Basically, XBRL involves "tagging" data to give it context. Equally important, that number can now flow automatically and in real time anywhere the same tags are found and is machine-readable without human intervention. It would also, for example, allow apples-to-apples comparisons of various companies' financial performance, something the SEC will be able to offer investors next year because publicly-traded companies now have to report their results using XBRL.
XBRL is far more than a technical tool. One XBRL expert, Bryant University Prof. Saeed Roohani, says that if it had been in place around 2004, the entire global financial collapse might have been avoided ".... there would have been little room for mystery about types of portfolios and derived financial instruments that recently failed institutions were holding. Alarms would have been sounded long before reaching a crisis; the government and stockholders could have taken preventive action."
Issa has pointed out that the GAO's annual review of the federal government's consolidated financial statements has never produced a clean audit opinion, because agencies use inconsistent standards.
Beyond the auditing problems, by not standardizing on XBRL the government is denying itself an important tool to improve decision-making and interagency cooperation.
In the Netherlands, where companies have had the option since 2005 of reporting to all federal agencies using a single XBRL data file (the relevant numbers automatically flow to every department where they are needed), the government has improved the quality of business regulation while simultaneously reducing the reporting burden on companies (the average company now reports only 8,000 pieces of data, compared to 200,000 before) because all of the agencies can simultaneously review a given company's filings.
Similarly, if all federal agencies used XBRL, they would be able to share their own operating data simultaneously, uncovering inefficiency and redundancy. One consultant familiar with the notoriously-inefficient Pentagon procurement process told me that implementing XBRL and related reforms could cut 20% of procurement costs without any real effort.
XBRL is a tool whose benefits multiply exponentially the more governments and companies use it because of the network effects phenomenon: one agency using it in isolation has limited value, but the more that do and use it to share data with other XBRL users the value of the XBRL network is the square of the number of users. With other countries such as Australia and New Zealand following the Netherlands and adopting "Standard Business Reporting," it's likely this will become a global standard rapidly, and countries and companies not using it will be at a competitive advantage.
XBRL has been around for a decade, and has not realized its potential impact because it's thought of by government and industry alike as just a compliance tool. If the Obama Administration was to make nice with Issa and push for S. 303, the benefits of interagency cooperation, better decision-making and transparency would be a quick and major contributor to meeting both parties' goals while actually improving the quality and speed of government services.
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