Capstone Project for MBA – Machine-Readable Financial Statements

In my final Capstone project for my MBA, I’ve been trying to get a few municipal governments in Western Canada to open up their yearly financial statements in a machine readable format.

This was surprisingly hard. I spoke with people from the City of Vancouver, the City of Edmonton and the City of Victoria. I also presented the idea at the February Open Data Summit in Vancouver. At the same event, we discussed the idea at a round table, getting good suggestions and ideas from participants from the open data community. I’ve also blogged about the idea here and there.

In the end, I did get some traction at the City of Victoria. Right from the beginning Marianne Alto was supportive of the idea. In fact, it was something that she had already been thinking about. The data is not available yet, but it should be coming soon.

Looking forward to it!

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Government of Canada Open Data Roundtable in Vancouver

Today, I attended the Government of Canada Open Data roundtable consultation in Vancouver. What struck me was the brain power, innovative thinking and open data expertise from a wide variety of viewpoints and backgrounds.

The session was led by David Eaves who, by the way, is an excellent facilitator. Even though he has forgotten more about open data than many of us will ever know, he did not dominate the conversation with his views, but facilitated great participation from the group.

The main themes from the roundtable were: data standardization, user-centric design, search-ability (really difficulty to search) data, registries of data (open or not), and quality of data.

On the theme of data standardization, there was a discussion about whether the Government of Canada would be suitable to provide the governance, guidance, and/or facilitation for the collaborative standardization of open data standards for other levels of government in Canada. Many agreed that this would be a vital role for the Government of Canada to play because data standardization is so important to increase the scalability and value of open data.

Someone commented that standardization should not become a barrier for the release of data, an important point.

Another view is that disruptive innovation that begins with one or two municipalities is, historically at least, the most effective catalyst for open data standardization, citing examples of standardized transit data (GTFS) and Open311.

I tend to agree with the micro-to-macro approach to driving out standardization. You don’t have to get it right the first time. Two municipalities can come up with a standard for reporting on high-level financial statements in a machine-readable format, for example. This standard will evolve over time with adoption of other interested municipalities and more financial detail becoming standardized and openly available.

This brings me to a Capstone Project that I’m working on to complete my MBA. I’m looking for one or two municipalities who would be interested in participating in an open data standardization pilot by  releasing their financial statements in an machine-readable format.  This information is already available in a PDF format, but PDF makes it difficult to do any comparative analysis between municipalities, which would provide value for public administrators and interested citizens. If you, or anyone you know, would be interested in participating in this open data standardization pilot, please let me know.

 

Standardized, Open, Machine-readable Format for Financial Statement Data

At the Open Data Summit in Vancouver yesterday, I gave a 5 minute ‘lightening talk’ about the future of open data and how open data standards will increase the number of people who can use a data set and the impact of code that is written against that data.

Photo credit: Bowen Osoko (@bxmx – Instagram)

At the end of my talk I issued a call to action to consider ways to standardize on financial reporting for public sector organizations, primarily financial statements and budgets. Financial reporting is (hopefully) low hanging fruit. Public sector organizations are already required to publish financial data by adopting the accounting and reporting standards established by the Public Sector Accounting Board (PSAB). Unfortunately, for open data enthusiasts like me, this data is almost exclusively in PDF format.

The immediate value proposition of an open, standardized format for publishing financial statements would be for citizens and public administrators to:

  1. Easily compare financial statements between jurisdictions for comparative analysis of revenues and expenditures
  2. Enable civic hacking, essentially free development for the public sector organization, creating value for citizens
  3. Open up the data for other tools and analysis
  4. Facilitate interoperability and data exchange between data sets
  5. Lower the barrier of entry to this information (value realized within and outside of the public sector organization)
  6. Reach a wider audience with open APIs built for these standards. These APIs would be used by any organization using the standard specifications.

Recently, while consulting for a large municipality in British Columbia, the City Manager asked for a comparison of his IT budget to similar sized municipalities providing a similar set of services. He wanted to get an idea of whether his IT spend was below or above average. This comparative analysis was relatively difficult to do because IT spending is reported differently in each municipality and sometimes IT services are centralized and sometimes they are decentralized throughout the service areas such as Engineering, Planning and Development, and Parks and Recreation. Open, standardized, machine-readable municipal financial data would make this cross-jurisdictional analysis much easier.

Citizens would also become more informed. Today, we pay our taxes, but have little understanding on how they are spent. Taxes should be considered an investment. We are investing in public infrastructure, health, education, and other citizens’ services. Citizens should have granular visibility into how our taxes are used. Today, it is a black box (okay, really its a PDF but not easily consumed). With open, standardized data, we could build easily understood dashboards or data visualizations of how our investment (taxes) is being spent.

During breakout sessions we brainstormed possible solutions to my call to action. Philip Ashlock, the co-founder of the Open311 standard had some great suggestions to implementing a standard for financial reporting. Many of these steps are generic to any kind of standards setting.

  1. Research – don’t re-invent the wheel. Check out the Civic Commons Wiki to see what has been done before in other cities across the globe. 
    1. Check out Checkbook New York City
    2. Check out XBRL (Extensible Business Reporting Language) an XML-based computer language for the electronic transmission of business and financial data
  2. Narrow scope – at first we were thinking all financial reporting for public sector. We have narrowed that down to Financial Statements for municipalities in British Columbia.
    1. Ideally, we want to start with one municipality. Demonstrate success and then sign on other interested municipalities.
  3. Develop iteratively – find partners such as civic hackers, vendors, municipalities. Start small, demonstrate value, and continue.
  4. Be flexible – you don’t have to standardize everything.

Philip described a tale of two cities with the standardization of Open311. It started with a more simple standard in Washington D.C. and a more complex standard in San Francisco. Both cities worked cooperatively to create interoperability between the cities (see more here). Philip told us that they did not have to standardize on all data elements, and that flexibility helped with the standard’s adoption.

One of the challenges brought up by the group was that allowing financial statements to stand alone, without the accompanying documentation (i.e., text) in the PDF, would be a violation of generally accepted accounting principles (GAAP). The solution to this objection is that the documentation could be included in the metadata or in corresponding data fields in the data standard.

Do you work in a municipality would be willing to take on the challenge of open, standardized financial reporting? Have any ideas for action? It would be great to hear from you.