In the aftermath of banking failures, subprime mortgages, and bailouts across multiple industry sectors, it is a good time to examine the strategies it will take to rebuild public trust in our ernment and in the world’s financial markets. I believe the answer depends both on what we can do and how we do it.

With all the financial information that rporations were obligated to report because of existing ernment regulations, how uld we not have foreseen this financial disaster? Did we misread the data? Was the information in the reports inrrect? Is there more that should have been required to report?  What was missing were regulations that properly addressed how the information was to be reported. Being specific on the “how” may very well have provided the warnings of the impending disaster rather than finding out how bad it was in the midst of it.

The key to solving the problem is figuring out the best way to publish our data.

A major step towards solving the problem of how to report financial information has been addressed in the latest set of regulations from the U.S. SEC. The regulations now require a growing number of mpanies to provide financial statement information in eXtensible Business Reporting Language (XBRL). Once all mpanies that are required to report use this format, analysts will be able to provide more aurate and timely warnings. Rather than using the past rules of demanding information — whether locked inside spreadsheets, forms, PDFs, the web, and other proprietary formats — specifying XBRL makes the data more usable and more easily gathered and analyzed.

If we can’t find the data, if we can’t figure out the problems that may be buried in the mountains of information, and if we haven’t any means to explore the data, we are no better prepared for the next financial crisis.

Creating pliant Data

To mplete the true financial picture of our enomy, we need to mplete the move to XBRL to ensure that all financial reporting is available as XBRL-tagged ntent. The ernment also needs to use XBRL reporting as part of creating a mplete picture of the enomy. As the bailout legislation, Revery Act and other massive appropriations that include requirements for public disclosure ntinue, XBRL reporting uld provide an excellent method of measuring the effects to the enomy in real-time. Usually enomic indicators lag behind because time is needed for surveys and reports to be llected and processed.

The initial impact of new regulations layered on of existing regulations like Sarbanes-Oxley will be that rporations will be obligated to publish even more data, more frequently. The Obama administration’s effort to push more ernment data out via Revery. is a good example of the movement to enurage more disclosure. If that information was in XBRL, we uld more easily use the data. As the ernment rolls out its mandate for rporations to submit their financials using XBRL to the U.S. SEC for closer scrutiny and better mpliance, they uld also take a page from their own book and make all ernment financial reporting available to the public in XBRL, facilitating a more open national dialogue on our ernment’s financial health.

As Obama said in his Memorandum on Transparency, “ernment should be transparent. Transparency promotes acuntability and provides information for citizens about what their ernment is doing. Information maintained by the Federal ernment is a national asset.” This information needs to be mpiled in a harmonized, mpliant fashion across agencies to facilitate its preservation, dissemination, and exploitation and to maximize the research that is derived from it.

nnecting the Data

Like pages on the web, we intuitively know that the public data being posted to s like SEC. and Revery. is internnected with other sources of data. But disvering the nnections when all the data is in disparate formats is next to impossible for most — even  the expert research analysts at times. The ernment has already started to require XBRL with positive results in terms of aess to data, so there should be no reason not to settle on XBRL for all financial reporting by mpanies and ernment entities alike. Beyond any specific qualities of XBRL, just by using the same format, reporting and analyzing the reports is faster and more likely to be aurate.

Further transformations like those proposed at revery. (such as a service to transform the data to RDF-tagged semantic data) can allow the financial data in XBRL to be mbined with data from other industry and ernment sectors — transforming the way we explore information.

In addition, the data about the data needs to be disverable. Just having information in a usable format does little without it being easily aessible. Any kind of data object or ncept should be found at a specific Uniform Resource Locator (URL) so that people can look up specific names, get useful information, and disver more.

As Tim Berners-Lee, director of the World Wide Web nsortium, put it, “It is about making links, so that a person or a machine can explore the web of data. With linked data, when you have some of it, you can find other related data.”

Another nsideration is trusting the provenance of the data itself — maintaining the nnection to the source of the data whether it’s a filing on the SEC web or a revery. document listing all the grant recipients for bailout funds. If the link (or URL) to the primary data source is lost, the nnection and the provenance of the data is no longer assumable and any derived research loses its authenticity. When posting financial information for public nsumption, entities enter into an unspoken agreement to maintain those links with the nsumers. As more and more data is available online, the long-term stability of ernment s and the ntinued maintenance of links must be guaranteed. The links are the mechanisms that will enable us to trace back to the sources and link us to the authoritative literature; whether that ntent is a Financial Acunting Standards Board (FASB) ruling, a Senate Bill allocating billions of bailout dollars, or the financial data related to an entity’s mpliance with these rules and regulations.

If ernments and rporations publish financial information using harmonized data standards and ensure that relevant links are maintained and aessible, this will go a long way to improve finding the location of relevant data.  Public scrutiny will diminish, and we will again trust the financial markets and the agencies that regulate them.