The Open Financial Statement Act
Whereas state and local governments are filing their audited financial statements in outmoded PDF formats,
Whereas local governments are required to file both audited PDFs and unaudited Annual Financial Reports containing duplicative or contradictory information,
Whereas many pension systems, fiduciary trusts and component units also file audited financial statements in outmoded PDF formats,
Whereas transitioning these documents to machine readable formats will ease the identification of fiscally distressed local governments and will increase liquidity in the municipal bond market,
Therefore, the State will undertake this transition.
(1) Local Government, Pension Systems, Fiduciary Trusts and Component Unit Financial Statement Format
It is the intent of the legislature to replace PDF-formatted audited financial statements with filings utilizing Interactive eXtensible Business Reporting Format (iXBRL). It is also the intent of the legislature to establish these iXBRL audited financial statements as the only annual financial filing required from public agencies by the state. To implement this change:
(i) The governor shall appoint a seven-member commission including (1) a representative from the State Controller’s Office, (2) a representative from the State Auditor’s Office, (3) a representative of a city or county, (4) a representative of a special district, (5) a government accounting researcher affiliated with a state university, (6) a municipal bond investor and (7) an information technology professional employed in the private sector. This body shall be named the “Open Financial Statement Commission” or OFSC.
(ii) The legislature appropriates $_______to the OFSC with the following restrictions: (1) none of the appropriation may be spent on member or staff salaries and (2) no more than $_______ of the appropriation may be spent on committee meetings.
(iii) The commission shall choose contractors to (1) build one or more XBRL taxonomies suitable for state, county, municipal and special district financial filings and (2) create a software tool that enables financial statement filers to easily create iXBRL documents consistent with the taxonomy or taxonomies. Contractors shall be recruited and selected through an open Request for Proposals process. The OFSC may require the use of existing taxonomy(ies) when prudent to reduce costs and increase comparability between entries.
(iv) The commission shall evaluate the contractors’ prototype taxonomy and filing software and specify any changes it deems appropriate. It shall require that all work be completed no later than <<Date0>>.
(v) The commission shall submit a report to the legislature no later than <<Date1>> describing the work products and advising of its decision as to whether to implement the taxonomy or taxonomies.
(vi) If the OFSC deems the work products adequate, all governmental financial statements pertaining to fiscal years ending on or after <<Date2>> must be filed in iXBRL format and must meet the validation requirements of the relevant taxonomy.
(vii) If the OFSC deems the work products unacceptable, it shall instruct its contractors to make necessary revisions or replace the original contractors with new ones capable of making the necessary revisions. The commission will then make a second implementation decision no later than <<Date3>> and provide a second report to the legislature no later than <<Date4>>. If the commission fails to recommend an implementation by <<Date5>>, it will be dissolved, and the filings will remain in their current formats.
(viii) Once a government commences filing in iXBRL it will no longer be required to file a PDF, submit an Excel-based AFR or complete any online forms requesting annual financial statistics. If any state agency is unable to use iXBRL financial statements by <<Date5>>, it will be the Department’s responsibility to convert the iXBRL filing into PDF for its internal use.
(ix) The OFSC will be tasked with identifying changes to reporting requirements that bring AFR into alignment with CAFR to facilitate the latter satisfying the requirements for the former.
(2) State Government Report Format
For fiscal years ending on <<Date 5>> and thereafter, the State Controller shall submit the comprehensive annual financial report in Interactive eXtensible Business Reporting Format (iXBRL) format if the Open Financial Statement Commission described above has mandated the use of this format by local governments.