Despite significant efforts by GFOA, our members, and other state and local government organizations, the Financial Data Transparency Act (FDTA) cleared the final hurdle after Senate passage on December 15. The FDTA is part of the long-awaited compromise version of the National Defense Authorization Act (NDAA); the measure now heads to President Biden’s desk for signature.
As GFOA has discussed over the past few months in this Newsletter and other outlets, the FDTA mandates governments to ‘tag’ their financial information using a machine-readable format. In the final version awaiting the president’s signature, the SEC is responsible for enacting the data standards. Because they are subject to the Administrative Procedures Act, the SEC is subject to congressional oversight. GFOA will rely on continued outreach from our members as the rulemaking process gets underway over the coming months.
These mandates are set to be in place in about four years, following the development of data standards by various departments of the federal government, and more specifically by the SEC for municipal securities information. GFOA remains concerned that this is a significant unfunded mandate and places great cost and administrative burdens on governments and entities of all sizes. We anticipate that governments will have to outsource this function or enable their current systems to create this format for the financial information used for EMMA submissions.
Some changes were made since the original legislation was introduced, and should be helpful to GFOA members. They include:
- There are no new issuer disclosure requirements associated with the legislation. The legislation only seeks to require the way in which data will be submitted.
- GFOA and the issuer community will have a seat at the table as data standards are developed by the SEC.
- The SEC and other federal agencies must be cognizant of the impact the rulemaking will have on governments and governmental entities. Your input will be needed along the way.
There is a long road ahead as rules are written, and the taxonomy is developed in order for governments to understand and implement these data standards. GFOA will lead the charge for issuers during this forthcoming arduous and long process to best protect governments and ensure the easiest and least costly ways to implement these mandates. Keep an eye out in the new year as we develop resources, including alerts for agency rulemaking notices, to help you engage in this important process.