U-M part of consortium launching review of government financial data standards
Governments, standard setters, regulators and analysts encouraged to provide input
A pilot project involving the University of Michigan and others is exploring whether a new fiscal reporting mechanism for governmental entities can help create transparency—and prevent future financial crises.
The consortium, which includes the Center for Local, State, and Urban Policy (CLOSUP) at U-M’s Ford School of Public Policy and XBRL US, in partnership with the city of Flint, seeks input from the public and concerned entities about its initial digital financial data standards for local government reporting entities.
The most important and reliable information for understanding local fiscal health is found in audited Annual Comprehensive Financial Reports. While data in these ACFRs in Michigan are currently provided as PDF documents—which severely limits their accessibility, comparability and usefulness for many stakeholders—the open standard, based on XBRL (eXtensible Business Reporting Language), will modernize and digitize municipal financial reporting in order to better share the information with the public, state and others.
The digital standards, called a taxonomy, cover seven key financial statements and four associated footnotes, from the ACFR, as well as two Michigan-specific reports required to be prepared by local entities. In addition to taxonomy development, the project includes a pilot with the city of Flint, to provide the tools and support needed to render financials in their ACFR fully searchable and machine-readable.
“Transparency into local government fiscal health is needed to handle challenges communities in Michigan and around the country encounter today, from pandemic- and infrastructure-related costs, to economic issues like inflation,” said Stephanie Leiser, CLOSUP’s Local Fiscal Health Project leader. “Open data standards generate financial data that will help local entities respond faster, and have the information to make better policy decisions.”
During the 60-day public review period set to end Aug. 15, participants have access to the digital standards for government reporting (taxonomy) in an online viewer and in downloadable form, sample machine-readable financial reports, and instructions on how to review and participate. The ACFR Taxonomy includes governmentwide governmental funds and proprietary fund statements, as well as footnotes for pension, OPEB (Other Post-Employment Benefits), capital assets and long-term debt.
The taxonomy covers all concepts needed for the Michigan Chart of Accounts, in addition to separate entry points (sections of the taxonomy) for the Michigan Form F-65, Local Unit Fiscal Report and Michigan Form 5572, Retirement System Annual Report.
The ACFR Taxonomy was developed through the work of the XBRL US Standard Government Reporting Working Group, composed of municipal securities analysts, academics in government accounting, research analysts and software tool providers that support government financial reporting. Members of the working group contributed resources and expertise to build the taxonomy and supporting materials.
Applications for taxonomy development and review were contributed by CoreFiling Ltd. XBRL creation tools were contributed by IRIS Business Services LLC and Workiva Inc.
“Our working group was launched in 2018 and we developed three separate releases of the ACFR Taxonomy solely through the volunteer efforts of our members,” said Marc Joffe, senior policy analyst with the Reason Foundation and chair of the XBRL US Standard Government Working Group. “The partnership with CLOSUP and Flint has allowed us to greatly expand on that work to build a commercial-grade taxonomy. The work in Michigan can easily be transferred to other states with a similar focus on transparency.”
XBRL US is the nonprofit consortium for XBRL business reporting standards in the U.S. and represents the business information supply chain. Its mission is to support the implementation of business reporting standards through the development of taxonomies for use by US public and private sectors, with a goal of interoperability between sectors and promoting XBRL adoption through marketplace collaboration.
The pilot project with the city of Flint was made possible through a grant to U-M from the Charles Stewart Mott Foundation.