What is the FDTA?

Signed into law by President Biden on December 22, 2022, the FDTA requires the US Treasury and seven other federal regulators to make financial data provided by local governments more accessible, uniform, and useful to the public by enacting the following mandates:

• Use of Common Identifiers. Common, nonproprietary identifiers must be established for use across the covered agencies.
• Use of Searchable, Machine-Readable, Open Data Standards. An open data standard that supports high quality data through the use of schemas must be selected as the new format for entities to submit their continuing disclosures. The format must also be accompanied by a taxonomy or ontology model that defines the semantic meaning of the data.

There are no new reporting or disclosure requirements in the FDTA.

The FDTA and XBRL

XBRL or inline XBRL is a likely candidate for the open data standard. As data model that can add semantic information to data using a taxonomy, it ticks all of the boxes the FDTA requires and has the benefit of already being used with great success by the SEC for EDGAR filers.

As the agency that oversees the MSRB, the SEC may choose to use XBRL for EMMA filers as well.

Currently, the Government Reporting Information Package (GRIP) taxonomy is under development at XBRL US via the Standard Government Reporting Working Group. This group seeks to help standardize financial reporting across state and local governments by designing schemas and XBRL taxonomies to allow for open data reporting for state and local governments.

The 2022 GRIP taxonomy contains a demonstration release of the Annual Comprehensive Financial Reporting (ACFR) Taxonomy that incorporates a Michigan-specific extension taxonomy in addition to the Grants Reporting Taxonomy and the Single Audit Taxonomy. If you’re interested in seeing a demonstration of the GRIP taxonomy, contact sales@novaworks.com.

Implementation

The implementation of final rules to meet the FDTA is still a ways away, but filers should start preparing now. Final rules from the SEC are likely to be promulgated around December of 2026.

What can preparers do now?

• Determine what financial reporting you perform that is subject to the FDTA. This includes determining how often compliance is required.
• Assess your current systems to determine what you will need to comply with the open data standards.
• Establish internal controls to meet any new reporting requirements.