Modernizing financial reporting in Florida with XBRL

Tagged with:

SBR, XBRL, Public Sector, CAFR
Florida

A Conversation with Jim St. Clair, CTO at Dinocrates Group

In the United States, thousands of governments at the state and local level publish comprehensive financial reports (known as CAFRs) every year. These reports are prepared, for the most part, using a combination of Word and Excel and then exported as PDFs. This makes the data excruciatingly hard to analyze and diminishes transparency, leaving “important policy and financial questions unanswered,” as the Reason Foundation’s Marc Joffe writes. Florida has become the first state to adopt legislature that directly addresses this issue by implementing XBRL (eXtensible Business Reporting Language) for local government financial reporting. The state will require public agencies to file their CAFRs in machine-readable XBRL format, rather than as PDFs, starting in 2022.

Dinocrates Group and Visma Connect are at the center of this transition. The companies were awarded a contract to support the state of Florida in the development of the XBRL taxonomy. In this interview, Jim St. Clair, CTO at Dinocrates Group, discusses the journey to XBRL adoption in Florida and how the fortuitous collaboration between Visma Connect and his company developed. 

Jim, can you tell us a bit about yourself and your background in the industry? 

Jim St. Clair, CTO Dinocrates GroupI have been CTO at Dinocrates Group for two years. I assumed the role in 2017 to manage the portfolio of technology vendors we work with and to round out and expand our technology offering. My connection to the world of Standard Business Reporting and XBRL, in particular, back several years. In 2006, I was working for Grant Thornton, who is one of the leaders of the XBRL practice in the U.S. I worked very closely with the Grant Thornton representative who dealt with XBRL implementations and have stayed highly involved ever since. 

Can you give us an introduction to Dinocrates Group? 

Dinocrates LogoDinocrates Group is a Maryland-based boutique strategy and technology advisory firm. Dinocrates was Alexander the Great’s chief technical advisor and the architect who designed the ancient city of Alexandria. We honor our namesake by helping government and private industry clients identify the highest-value opportunities, address their most critical challenges, and transform their enterprises. Our consulting firm has different practice areas, including digital process re-engineering, cybersecurity, data analytics, Robotic Process Automation, Blockchain and other services. 

How did you hear about Visma Connect? 

We work closely with technology vendors to implement the systems required by our customers. TIBCO is one of our partners. I heard about EBPI (now Visma Connect) during a TIBCO conference. I was quite surprised and pleased to hear about EBPI’s experience with XBRL and your company’s role in the implementation of Standard Business Reporting (SBR) in the Netherlands. It was quite fortuitous that Florida was looking to implement XBRL for financial reports. When the legislation was passed, I immediately reached out your team.  

Why are Dinocrates and Visma Connect are such a good team?

Since our inception in February 2014, Dinocrates has won over 20 prime and subcontractor contracts in federal, state & local, university, and commercial markets. Our extensive experience in U.S. federal and state government agencies is greatly complemented by Visma Connect’s extensive experience with the implementation of SBR in the Netherlands. 

Visma Connect is Europe’s leader in XBRL and standardized business reporting (SBR) implementation and manages over 800,000 XBRL messages and transactions for the Dutch government.

We can apply our combined expertise in government processes and technology to offer new solutions to US customers, like Florida’s state government.

Florida is the first state government in the U.S. to implement XBRL. Why did they choose Dinocrates and Visma Connect?

1280px-Flag_of_Florida.svgIn April 2019, the state of Florida released a nationally-available Request for Proposal to obtain services from a company to implement XBRL for its Comprehensive Annual Financial Report. 

The Dinocrates Group/Visma Connect team was selected over five other companies, scoring a perfect rating in our price proposal and almost a perfect score in our technical proposal.

Right now, we are developing an XBRL taxonomy to report on the CAFR and we hope this preliminary implementation will law the groundwork for additional contract efforts and inspire other government agencies to follow suit. 

Florida is the first state in the U.S. to recognize the value of XBRL and pass a law requiring the chief financial officer (CFO) to implement XBRL as part of financial reporting. The law became effective on July 1, 2018 and requires the Chief Financial Officer to create an interactive repository of financial statement information, called the Florida Open Financial Statement System. This system must have standardized taxonomies for state, county, municipal, and special district financial filings.

Are there similarities between the Dutch approach to Standard Business Reporting and Florida’s model? 

SBR standardizes reporting information and the way it is transferred. To be precise, it standardizes data definitions, the process through which data is transferred, and the technology used for the transfer. SBR relies on a number of open standards, the XBRL taxonomy being the most prominent one.

The Florida Open Financial Statement System conceptualizes a lot of the principles of Standard Business Reporting in terms of efficiency, greater transparency, and accountability. 

There are a lot of similarities with the Dutch model, but most are coincidental. Florida has an independently constructed framework. 

What made it the right time for Florida to adopt SBR? 

There is a strong need to make local governments’ financial performance data accessible, and it’s helped that Marc Joffe, head of the Reason Foundation, has been actively promoting SBR and leveraging XBRL for the sake of improving financial reporting. He helped craft and pass the legislation. 

How will the state of Florida benefit from this?

As Visma Connect has demonstrated in their work with the Dutch government and the Dutch Chamber of Commerce, interactive and machine-readable financial data greatly improves regulatory reporting, financial analysis, and automated processes to reduce manual activities.

With the XBRL taxonomy, Florida will make it easier for local government entities to submit required annual financial reports. In addition, the submitted data will be easier to further dissect and report on, so the state will have the best possible understanding of how its funds are being used.

Can other institutions use this as well? 

XBRL can be applied to all other financial information in state government, such as municipal funds, tax information and regulatory compliance. The importance of this pilot in Florida cannot be understated. Many other states will look to Florida for this open financial concept. California, in particular, is already moving forward with legislation for SBR. Florida’s initiative and its improved efficiencies in financial operations will be critical to what will become a new trend in U.S. state financial activity.  

Contact us

Contact us to find out more about XBRL and to learn how you can modernize your financial reporting.

 

Tagged with:

SBR, XBRL, Public Sector, CAFR