Senate Bill 598 -- The Open Financial Statements Act

February 22, 2019

Summary:

Senate Bill 598 modernizes California’s municipal finance reporting practices by replacing portable document format (PDF) audited financial statements with filings in inline eXtensible Business Reporting Language (iXBRL). It also establishes iXBRL audited financial statements as the only filings required from state and local agencies. To facilitate the migration to iXBRL, this bill establishes a multi-stakeholder process to oversee the development of an XBRL taxonomy suitable for public agency financial filings, and commission an open source software tool to enable agencies to create reports using iXBRL. Lastly, this bill requires the State Controller to post all public agency audit reports on their website.

Issue Background:

Over 1,500 public entities prepare annual financial statements, independently audited, and submitted to the State Controller. The reports are submitted as a PDF, either in a text-searchable format or as scanned physical documents producing data that are difficult to extract and analyze. In addition, most agencies submit an unaudited financial transactions report. This dual reporting requirement places an additional burden on local agencies where there are options to have all relevant data in one report, and increases the risk of the Controller receiving inconsistent data.

iXBRL is an expansion of XBRL, based on Extensible Markup Language (XML) which allows the user to tag values on financial reports with detailed information based on a taxonomy. Documents in iXBRL are web pages readable through a web browser, and also machine-readable, enabling software to extract data and create reports to evaluate, compare, and forecast.

Research:

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Contact:

Spencer Street, (916) 651-4037
Spencer.Street@sen.ca.gov