Bob Schneider is a Partner in 
Wilson So is the Director of Hitachi Consulting Corporation The Potential of XBRL in Federal Financial Reporting
Written by Bob Schneider Posted on January 23, 2010
For 20-plus years, I have struggled to learn Japanese. A primary challenge has been to remember some 2,000 characters Japan imported from China. Because they derive from ideograms (ie, graphic symbols of ideas), like many students, I have tried to remember the character by looking for the graphical elements of meaning still present within it.
Good luck with that. Among the many reasons this approach is (mostly) unhelpful is that – almost from the beginning — characters were sometimes miscopied, corrupting and confusing the meaning elements within them.
Of course, East Asian characters do not have a monopoly on transcription issues. Numerous scholars are devoted to textual criticism of the Greek classics, seeking to identify, interpret, and remove copying errors. It’s not hard to conjecture some reasons for the mistakes – hard-to-read handwriting, the distraction of a comely Grecian walking past, a scribe with his own agenda going rogue (or at least introducing small variations).
I mention these events of antiquity because ever since computers entered the office, people have been blaming them for screwing things up. (Film buffs will recall how EMERAC, brainchild of IT consultant Spencer Tracy, fired the CEO at Katherine Hepburn’s company in the 1956 movie Desk Set.) But it’s not the mechanical, automated workings of the computer that are at fault. It’s the manual processes requiring human input and intervention that gum up the works.
We were sadly reminded of this fact by the misspelling of Umar Farouk Abdulmutallab, the Christmas bombing suspect, in a State Department database. A correct entry may not have prevented the incident, but we do know his name appeared on some government lists and not on others. Certainly the failure to uniquely identify this individual in the government’s information systems points to the utility of “enter once, use many” data entry that minimizes human intervention.
The need for consistency and accuracy in names pertains as well to government financial reporting. Rekeying of financial data is not only costly and time-consuming, but it introduces the same sorts of error and inconsistency that manual processes always engender. Three years ago I discussed the report Transforming Financial Information: Use of XBRL in Federal Financial Management. In describing the benefits of consistency that XBRL would bring to Federal budgeting formulation and execution, the report states:
Having a single XBRL based window for the transfer of information would also eliminate a number of reconciliation points, since budget request submissions and reports would be created from the same underlying data with no manual intervention. XBRL would ensure consistency across all agency financial review reports and reduce the reconciliation burden of the recipients such as FMS, OMB, GAO, and Congress. The transition of the closing package data from PDF or Excel to XBRL would also address cost issues imposed on FMS by receiving reports from agencies that use inconsistent terminology and rules of classification. XBRL would allow all agency recipient entities to utilize a standard vocabulary for all closing package reports.
I can’t find evidence that any progress has been made in introducing XBRL to the Federal budgeting process in the past three years. There has been the recent push to have public companies receiving government bailout funds to use XBRL to report how they spent the money. The bill passed the House with bipartisan support on December 14, and it is included in a larger Senate bill renewing the Federal Financial Assistance Management Improvement Act (FFAMIA). According to a January 5 report in Compliance Week, both branches of Congress have approved versions of the bill, and only minor differences remain to be reconciled before obtaining the President’s signature.
Coupled with the SEC’s XBRL mandate, the Federal government appears to be making significant progress in having companies provide data in XBRL; but it has made less headway in introducing the data standard to its own financial reporting systems. As the bipartisan sponsorship on renewing the FFAMIA indicates, this seems at least one area of public policy that might not descend into political squabbling, and where the benefits of eliminating manual processes in information systems can be obtained.