This past Monday, the House unanimously passed The Digital Accountability and Transparency Act of 2014 (The DATA Act). The DATA Act was passed by the Senate earlier this month and President Obama is expected to sign it into law, based on his support of this Act in the past.
The Data Act
The DATA Act is an extension of the 2006 Federal Funding Accountability and Transparency Act and mandates the adoption of consistent government-wide data standards in its reporting on government spending. Using this consistent language in its financial reports enhances accessibility for policy makers and tax payers. A public, searchable and reliable database of government spending will be accessible on a new and improved www.USASpending.gov, allowing users greater access to information regarding government grants and contracts between the federal government and grantees and contractors. The result is anticipated to be greater accountability of those who spend tax payer dollars, as well as those who grant and monitor government dollars. The DATA Act will commit the Office of Management and Budget (OMB) and the Treasury to utilizing more robust data standards throughout all aspects of funding, including budgets, grants, contracts and other financial reporting.
The DATA Act aims at reducing waste and fraud and increasing the transparency and effectiveness of government spending across agencies. Many believe this bill will greatly modernize the way the government tracks and monitors agency spending, as well as increasing the ease of information gathering. Under the current system, all budgets, grants, contracts and disbursements are largely reported in manual formats, such as tedious forms and spreadsheets. As a result, obtaining information regarding agency spending and grant reporting is extremely cumbersome and time consuming. In addition, the current system lacks methods for enforcing existing regulations regarding reporting certain information. The hope under the DATA Act is that a universal automated system will help to enforce existing requirements.
Non-Profit Industry Impact
How this will impact the non-profit industry is yet to be determined. Some question if implementation of new reporting standards will be a burden. Others feel that once up and running, a more modern system will save organizations a great deal of time and effort automating much of their financial reporting. Bill Co-sponsors, Sen. Mark R. Warner (D-VA), Sen. Rob Portman (R-OH), Rep. Darrell Issa (R-CA) and Rep. Elijah Cummings (D-MD) explained in a Congress blog post published on thehill.com, on December 16, 2013 that a new system would greatly decrease the burden on entities that are awarded taxpayer dollars, such as state and local government agencies, as well as higher education institutions, citing the current system of duplicative forms and reporting. The lawmakers claim that “If this reporting were streamlined, our institutes of higher education and our state and local governments could direct more funding to programs and less to overhead costs.”
While the implementation issues and questions have yet to be answered, most agree that the requirements set forth in this proposed legislation will create greater accountability, accuracy and efficiency in overall government spending and help to tackle the ongoing concern of government waste and fraud.
Jeanne Pagnozzi is a manager in BlumShapiro’s Accounting and Auditing Department, based in Quincy, Massachusetts, Jeanne oversees attest and tax engagements and is responsible for engagement planning, staff supervision and coordination with client personnel to ensure successful completion of projects.