As 2022 drew to a close, a surprising turn of events in municipal finance occurred: A federal bill to enhance financial data transparency for state and local governments unexpectedly became law. The enactment of the Financial Data Transparency Act (FDTA) initiated a four-year countdown period for implementation, anticipated by many to bring unparalleled transparency and access to municipal financial data.
The FDTA instructs the Securities and Exchange Commission (SEC) to adopt standardized data reporting protocols for all financial disclosures submitted to the Municipal Securities Rulemaking Board. These disclosures must be machine-readable, with information in a structured data format tagged with identifier codes, enabling enhanced data analysis and comparability.
Following a year of data collection and consultations with various stakeholders in the municipal market, including bodies like the Government Finance Officers Association and the National Association of State Auditors, Comptrollers, and Treasurers, the SEC is soon expected to issue its rulemaking release for notice and comment.
Due to the law's vagueness regarding its scope, the onus falls on regulators to determine the extent of market disruption and the potential impact of the stipulated requirements. The upcoming year will be pivotal as discussions and decisions regarding crucial details such as technology specifications, data tagging requirements, and implementation strategies unfold.
The FDTA Playbook, Owning Your Fiscal Future is a valuable resource for municipal finance professionals navigating the initial phases of implementation. The guide aims to equip stakeholders with the necessary information to brace for the impending changes.
Furthermore, it's crucial to recognize that challenges can often present opportunities. Similar to how the pandemic accelerated the adoption of new technologies and work practices within governments, compliance with the FDTA could drive governments toward more efficient and user-friendly financial management processes. Those actively seeking ways for their communities to leverage data modernization will emerge from this transition with enhanced strength and fiscal resilience.
We understand that you face a talent shortage and are unsure how you will meet the challenges of the new regulations. We can help your organization prepare for the upcoming changes by assisting with audit preparation and compiling your financial reports. Contact Elvia Garza, Senior Manager of Business Services, for more information on how we can help you.
