2023.05.17: The Financial Data Transparency Act: Get on the Glidepath!

Original article published on Linkedin by Dustin Lanier, CPPO

(This article was also recorded as a podcast, give a listen here!)

The Financial Data Transparency Act (FDTA) was passed as a part of the National Defense Authorization Act on Dec 23, 2022.

Originally a stand-alone bill, it creates requirements for local governments to meet open data standards for financial reporting over a period of several years, with standards established by federal agencies led by the SEC and Treasury. These standards will inevitably ripple outwards to states, education, and private sector entities that receive grants, provide loans, or provide data that feeds into local or federal levels of government.

Key standards that should come from this are financial reports that:

  • Include common identifiers
  • Are open and nonproprietary
  • Are able to render data searchable and machine-readable
  • Incorporate standards developed and maintained by voluntary consensus standards bodies
  • Are consistent with applicable account and reporting principles

This matters because there was no funding associated with making these changes, and several advocacy groups expressed concerns about the effort, span, and cost of implementation.

On the positive side, there is a multi-year timeframe for standard setting and requirements to establish these standards by engaging affected parties, and it does not create new reporting requirements.

In my opinion, the changes expected by FDTA are ultimately things that public sector leaders should be able to do in our finance and procurement organizations, especially if we are early in development and transition.

In a recent speech, I laid out five conversations that should be happening now in public sector organizations now as a result of this new driver:

  • Establish data governance as an executive-sponsored initiative
  • Ensure that data stores are known and silos are identified
  • Create the right layers of data management
  • Establish a comprehensive and repeatable taxonomy
  • Practice producing machine-readable reports now

Reference: Link to the entire Defense Authorization Act (which includes the FDTA)