In December of 2022, President Biden signed H.R. 7776 into law. Titled the James M. Inhofe National Defense Authorization Act for Fiscal Year 2023, the act includes TITLE LVIII, the Financial Data Transparency Act, usually shortened to FDTA.
The FDTA requires member agencies of the U.S. Financial Stability Oversight Council to follow strict data standards. These member agencies include the Federal Deposit Insurance Corporation (FDIC), the Office of the Comptroller of the Currency, the U.S. Treasury, the Securities and Exchange Commission (SEC), the Federal Reserve, and the Federal Housing Finance Agency.
In addition, the FDTA includes a strict requirement for standardized data to be implemented by the SEC as it relates to municipal securities. Some of the data standards these agencies need to follow include that the data be searchable, machine-readable, non-proprietary, and include common identifiers.
XBRL US Supports the Use of Data Standards
For many years, the efficiency of data preparation, analysis, and collection for both government and business purposes has been an area of significant concern. Technology has come a long way, but the US Financial Stability Oversight Council has been slow to adjust. As a result, productivity, efficiency, and transparency have fallen, but in the wake of the new law, document filing efficiency should significantly improve.
Right now, the XBRL standard is used by numerous agencies that report to a variety of US government organizations, including the FDIC, the SEC, and the Federal Energy Regulatory Commission.
According to the CEO of XBRL US, Campbell Pryde, “Requiring standardized data and identifiers across government agencies will reduce costs, increase transparency, improve the usability and timeliness of information, and will make it easier and less expensive for regulators to revise reporting requirements when needed.”
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Implementing Modern Financial Reporting Standards Effectively Can Help Issuers Save Money
While it remains to be seen how these federal agencies are going to implement the standards set forth by HR 7776, experts believe that if the SEC implements financial standards properly, it could result in significant cost savings for issuers. This could also benefit taxpayers who, ultimately, are responsible for paying debt service costs.
The SEC has an opportunity to streamline the processes and operations they use to analyze municipal securities while also opening doors to new investors, widening the population that can participate fully in the financial system. It will be interesting to see how the new standards under the FDTA help these agencies enact the data standards measures included in the new law.
How FDTA Will Utilize Municipal XBRL Filings Required by the SEC
With new standards being issued under the FDTA related to data reporting, storage, and transparency, municipal XBRL filings will have to meet a swath of new standards. The goal is to make these documents easier to access for consumers, but it also introduces a host of new requirements that companies will need to meet to avoid fines and sanctions by the SEC.
A host of municipal filings may be subjected to new XBRL filing requirements. They include filings related to municipal bonds, mutual funds, and other securities.
It will be incumbent on all companies filing municipal reports to ensure they meet new standards set by the SEC. Working with a professional team can help SEC filers reduce their regulatory liability.
Colonial Filings can Help With Mutual Fund XBRL Filings
These new FDTA data standards will have an impact on consumers and filers alike. Make sure your local or state government complies with these new Municipal filing and data standards by contacting Colonial Filings today. Ensure all of your XBRL filing requirements are met.