Last night the House of Representatives passed H.R. 5405 which, among other things, would exempt more than half of public companies in the U.S. from reporting their financial statements as open data.
The bill requires the Securities and Exchange Commission (SEC) to exempt public companies with less than $250 million in revenues from filing their financial statements in the eXtensible Business Reporting Language (XBRL), despite recent efforts by the SEC to begin ensuring the quality of data collected via XBRL. This represents a significant blow against transparency as these companies will now only be required to file their statements on paper, making it harder to analyze the potentially vital data.
The SEC currently collects this data in paper as well as electronic formats. We agree that this duplicative collection is unnecessary, but can’t support a move back to a past of unparsaeble paper filings. Instead of helping multi-million dollar companies avoid modern disclosure requirements, Congress should be helping the SEC ensure that it is collecting accurate data in a machine-readable format fit for the modern age.
In recent years the Obama Administration (in the form of the president’s open data executive order) and Congress (in the form of the DATA Act) have worked to move the ball forward towards machine-readable, structured data throughout government information generation and collection. If Congress and the President move to exempt companies from submitting financial statements in an open, machine-readable format it will represent a major step backwards from the gains both have made over the past few years.
If H.R. 5404, which was pitched as a bill to help reduce burdens on small business (up to and including “small businesses” worth $249 million), comes before the Senate, that chamber should remove any language that would exempt huge numbers of not-so-small businesses from an important transparency requirement.