California senate passes Open Financial Statements Act

California Passes Financial Statements Bill

By Srini Murty 26 May, 2019

On May 23, 2019, the California State Senate unanimously passed Senate Bill 598, the Open Financial Statements Act. The bill would establish a 9-member commission called the Open Financial Statement Commission in the Treasurer’s office. The commission would be contracting with vendors through an open and competitive bidding process to build taxonomies suitable for public agency financial filings and create a software tool that enables a public agency to easily create machine readable documents.

While the final version removes explicit mentions of XBRL and Inline XBRL, given its increasingly successful use in various structured data reporting initiatives worldwide, XBRL and related taxonomies and standards would likely be the best solution for this purpose. The objectives of providing machine-readable, structured data-based financial reporting for state and local government reporting are best met by using XBRL. Other states in the US, including Florida, have enacted legislation within the past one year establishing XBRL as the accepted standard for state and local government financial reporting. In addition to providing users of the data with powerful means to analyze it, XBRL has built-in capabilities to provide significant benefits to preparers of the data as well.

The bill would require the commission, by January 1, 2021, to report to the Legislature and make recommendations regarding how and whether to transition financial reporting by state and local agencies to a machine readable format.

Read text of the bill: