How Does the Government Spend Your Money?
The U.S. Senate passed the landmark Digital Accountability and Transparency Act (DATA Act) by unanimous consent April 10 and returned it the U.S. House of Representatives, where approval is expected by the end of the month. The House passed an earlier of version of the DATA Act by a vote of 388–1 last November.
The DATA Act creates a new paradigm for government accountability and is considered the most far-reaching, open-government legislation since the 1966 Freedom of Information Act. The DATA Act is part of the growing trend by governments to embrace structured, machine-readable data formats in place of HTML and pdf documents for regulatory reporting and is designed to make it possible to track the spending of federal agencies, which is difficult, if not impossible.
The importance of the DATA Act can’t be overstated. Hudson Hollister, Executive Director of the Data Transparency Coalition, has compared the potential impact of this act to two modern inventions. One was the Universal Product Code (UPC) and the other was the invention of HyperText Markup Language (HTML).
When the UPC was first introduced, it allowed supermarket cashiers to scan items rather than key in prices. It created a reliable supply chain of logistics information for individual products and forever changed the industry. Of similar note, the invention of HTML turned the internet into a communication hub for the masses during the 1990s, and its influence still reaches us today.
The changes envisioned by the DATA Act are designed to unwind and open up the current mess of government-required reports "by replacing inaccessible documents with standardized, searchable data," according to the Data Transparency Coalition.
The DATA Act sets standards for the use of machine-readable, modern technology in place of the current hodge-podge of government reporting requirements.
The DATA Act will create better transparency for taxpayers and citizens; improve federal management by illuminating waste and fraud; and reduce compliance costs by automating the creation of reports by grantees and contractors.
As with most complex legislation, many of the details of the DATA Act will be worked out in the months and years to come by the U.S. Treasury and the Office of Management and Budget. These two agencies are responsible for writing regulations and enforcing the DATA Act.
The standards the agencies put forth must "incorporate a widely-accepted, nonproprietary, searchable, platform-independent computer readable format and include unique identifiers for Federal awards and entities receiving Federal awards that can be consistently applied Government-wide," according to the DATA Act.
The DATA Act also includes exemptions for classified information and data exempt from the Freedom of Information Act. Otherwise, it requires everything the federal government spends to be published at the account level on the government site USAspending.gov.
The DATA Act allows for phased implementation that is expected to take up to four years for some aspects. During that time, there will be many more discussions about when, why, and how the act should be applied. Regardless, it's clear that the advantages of transparency far outweigh the alternatives.
To read more about the DATA Act and to stay up-to-date on its progress through the U.S. House of Representatives, go to www.datacoalition.com.
About the Author
Mike Starr is Vice President of Governmental and Regulatory Affairs. He previously served as the SEC Chief Accountant’s advisor with a focus on investors’ financial information needs and the role of structured data in meeting those needs. Prior to his work with the SEC, Mike served as Chief Operating Officer for Grant Thornton International Ltd., where he oversaw global strategy and public policy. He earned a Bachelor of Science in accounting from Oklahoma State University (OSU), and in 2010 was recognized as an OSU distinguished accounting alumnus and inducted into the School of Accounting Hall of Fame.