Many criticisms of data transparency policies – including both the DATA Act, which will standardize federal spending data, and the SEC’s movement toward standardized corporate financial statements – focus on the compliance burden that these policies impose on those who must report data in a new format.
These criticisms are short-sighted.
True, any requirement for a federal contractor or a public company to change the way it reports data will carry some front-end cost. But over the longer term, electronic standardization makes compliance cheaper, because it will allow innovative tech companies to build software that automatically compiles and submits required data.
Not convinced? These software products are already being built.
Level One Technologies‘ PARRAScope allows recipients of federal grant money to submit reports with a single mouse-click. PARRAScope and similar software will make DATA Act compliance easier and cheaper than federal grant and contract reporting is today. Similarly, software products from EZ-XBRL, Webfilings, Rivet Software, and EDGAR Online offer a way to automatically compile XBRL-formatted financial statements for submission to the SEC.
Advocates of data transparency usually focus first on the fact that it improves accountability. Better accountability for federal spending is surely the primary goal of the DATA Act. But we don’t mean to suggest a trade-off between better accountability and controlling compliance costs. Data transparency means better accountability AND cheaper compliance.
Our Coalition made that point at the American Bar Association’s annual convention last week. I joined a panel organized by the ABA’s Section of Public Contract Law to explain that federal contractors can expect streamlined compliance if the DATA Act passes and is properly implemented.
The ABA expects its panelists to back up their statements with research, argument, and footnotes. Thus, this panel appearance was a useful motivator for me to write and publish this new white paper. The white paper describes the need for data transparency in federal spending, explains the DATA Act as passed last spring by the House of Representatives, and puts the DATA Act in context with other data transparency initiatives around the world.