Understanding Machine-Readability in Modern Data Policy

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Executive Summary

Application of data standards in our society offers potential to ensure potential data users have access to information about what data means. With clear delineation of data meaning, researchers, analysts, and other data users can effectively use data to create value for the economy, policymakers, and society. Data standards promote common understanding and agreement on access to information. When made machine‐readable—a format that can be accessed and used by computers the efficiency and effectiveness of data analysis approaches are enhanced. The application of data standards and machine‐readable data‐reporting processes, such as with regulatory or compliance reporting, is currently underway as disclosure modernization sweeps through industry, academic, and governmental entities.

This paper provides an overview of why machine‐readability matters and asserts that public policy for disclosure modernization should specifically require that both the values that entities report and the compliance standards for reporting those values be structured as machine‐readable data. It concludes by offering three policy recommendations (detailed on pages 23 and 24):

• RECOMMENDATION #1: Policymakers should require machine-readability when possible.
• RECOMMENDATION #2: Policymakers should clearly communicate intent in legislative and regulatory actions on the role, purpose, scope of detail rendered as data, and applicability of data standards.
• RECOMMENDATION #3: Policymakers should encourage the adoption and use of open, consensus standards to encourage cooperation, efficiency, and innovation when drafting new data policies.

Disclosure modernization supports the proper functioning of compliance and financial systems, and most importantly, of governments themselves. The benefits and practical implications are vast, including that standardization builds confidence in compliance and financial systems which quickly and reliably detect fraud, errors, and other concerns. Improving public policies related to disclosure modernization can support efforts to enhance transparency and accountability in our society, ultimately including improving public trust in institutions.