Standard Business Reporting

A. Problem Analysis

 1. What was the problem before the implementation of the initiative?
For decades, the Dutch government is working to reduce the administrative burden on business, and is regarded by the World Bank as a world leader in doing so. Starting in 2003, a new ambitious reform project was started with one of the major goals to reduce the administrative burden. An important aspect behind this reform project was to give actual meaning to the widely held intention to make the public sector a better partner for the Dutch (business) society. Standard Business Reporting, SBR, is this ambitious reform project. Entrepreneurs want to do business. Tax returns, filing the annual reports, delivering statistical information and credit reports: all of these are obligations that the entrepreneur has not asked for. It takes significant time and effort to fulfill these obligations, partially because every organization wants something different. So before the introduction of Standard Business Reporting, companies were asked by various government agencies to deliver the same information in multiple ways. For the same data definitions, different data sets were used. This created for businesses a situation of unnecessary administrative burden, extra costs and frustration. For government agencies, it created a situation of not fully transparent, reliable of comparable data. For society, it resulted in a situation where tax money was spent in time-consuming, manual administrative processes instead of in the core activities of the government. When starting, different principles, different goals, were formulated that SBR would have to address on a higher level: - The contribution to reduce administrative burden - The close cooperation between government and business - The realisation of reliable, comparable (financial) data - The adoption of technology to facilitate regulatory compliance - The possibility to re-use information to stimulate economic growth Standard Business Reporting (SBR) provides governments and businesses with an unequivocal, cost-effective, secure and adaptable method for the exchange of business information between organisations in a reporting chain based on open standards.

B. Strategic Approach

 2. What was the solution?
• The goal of SBR is to reduce administrative burden and increase (financial) transparency and accountability • SBR is a methodology to achieve standardization of data definition, processes and technology across different domains for the exchange of information in a reporting chain. • The governance model is a key element in its success.

 3. How did the initiative solve the problem and improve people’s lives?
1. To improve decision-making, you need more reliable data In government as well as in business decisions are made on a daily basis, which lead to important changes in society. In the current information-based society, the availability and indisputability of data is essential for the quality of the decisions being made and the impact on its implementation. With SBR, the Dutch Government and the businesses in the Netherlands have come to an agreement on the way accountability information is being reported. This leads to an undisputed set of financial information. 2. Reducing administrative burden, freeing up resources for economic growth for companies To come to sound policy decisions, the Dutch government requires companies regularly throughout the year to deliver information about their businesses. Before SBR, companies were asked by various government agencies to deliver the same information in multiple ways. For the same data definitions, different data sets were used. Thanks to SBR, similar data sets are being used for similar data definitions, so companies can deliver the requested information with the proverbial click of the mouse. This leaves them with more time to focus on their business. 3. Financial transparency increases integrity in society Trust and confidence in government finance and of companies are now more important than ever in order to sustain the essential base of the economy. By definition, SBR contributes to this trust and confidence. It delivers a huge contribution to the unambiguous interpretation of financial facts and figures. Tax figures, annual reports or major statistics are all based on the same definitions. This enlarges the financial transparency considerably and enables speedier data processing & analytics. 4. Standardization is the most important element for e-society An example: the set of traffic rules and regulations makes it possible to easily drive from one country to another without causing major accidents due to an indistinctness of local rules. Standardization within SBR has proven its long-term added value to the participating organizations for the same reasons the traffic rules and regulations do. Due to the underlying agreements SBR can count on broad support and acceptance among participating organisations and all these parties comply with them strictly. Intermediaries & software companies will be able to standardize their processes and software and offer competitive and innovative services. 5. Public and private partners are stepping up together to strengthen e-society The Dutch government has set the ambition that in 2017 citizens and companies are able to handle all their affairs with the government digitally. In the elaboration of this intention, soon became clear that businesses are an essential link in the joint realization of this ambition. Within SBR, public and private parties are working closely together, based on an efficient governance structure, to make the e-society possible in the Dutch business world. In 2014, the SBR Roadmap 2020 has been developed in which the next steps for SBR are formulated, given direction to the participating parties how to proceed. The vision and goals of the SBR Roadmap are also the key drivers for organising the activities and they fit seamless in the SBR Governance, which is explained in answer to question C5. This organizational model ensures that all parties have a say, that the necessary investments are shared 'fairly', just as the social benefits. This creates buy-in and trust. SBR is most valuable as an ecosystem: when all participants in an information chain use SBR, the value for all participants is higher. Users are governments, ministries, government agencies, intermediaries (accountants), banks, businesses, educational institutions, housing corporations etc. For the SBR goals, we kindly refer to questions 1 & 2.

C. Execution and Implementation

 4. In which ways is the initiative creative and innovative?
SBR is unique because of three key principles: • Standardize on data definitions, processes and technologies throughout the information chain • Cooperate between the public and private sector, set up an appropriate governance structure • Adapt processes, laws and reporting frameworks if necessary in order to maximize efficiency SBR is innovative because it is a methodology. This makes it more sustainable and highly adaptable to future developments. While the cost of regulatory reporting is difficult to gauge, it is significant by any estimate. Using SBR, savings are being realized in more efficient processes, efficiency in time, less administrative burdens and financial savings. Other advantages are equally important as high quality of data, better accountability, better steering and participating in a future proof development. Being adopted by other regulators, the private sector and being used for more message types, the benefits of standardization are showing, leading to bigger savings. Participating in a widely-used standard is attractive: • The network effect: the more parties are able to send or receive SBR messages, the more valuable the standard is. • Economies of scale: software vendors and intermediaries can simplify their processes and offer their standardized products to a bigger and more innovative market.

 5. Who implemented the initiative and what is the size of the population affected by this initiative?
SBR was initiated by four ministries (Interior Affairs, Economic Affairs, Finance and Justice), with several agencies (tax, statistics, chamber of commerce) in a direct role. Right from the start, private sector associations and companies were involved in the decisions making bodies, the working groups, etc. One of the success factors of SBR is the governance structure with participation of employees from public and private organisations. Around 60 people participate in this governance. Many of them represent associations with huge amount of members, e.g. all (small and large) trade organisations representing tax advisors and accountants involved in SBR (around 17.000 organisations). Both governmental departments and businesses run the SBR program. The public- private partnership is structured into three types of consultation: SBR Board The Board is the decision-making body of the Dutch SBR Program. The SBR Board usually meets once every 4-6 months. SBR Platform Private parties and the government are represented in the Platform. The Platform is the link between the Board and the Expert groups. The primary task of the SBR platform is to coordinate the SBR activities and to ensure that these take place in proper context. The SBR Platform meets every month. SBR Expert groups Experts from the private and public domain participate in different Expert Groups and advise on the aspects that affect the SBR Program, such as data harmonization, legal developments, regulator rollout, international developments and communication. Organisations involved in the SBR Governance: • Departments of Interior Affairs, Economic Affairs, Finance, Justice, Education • Nederland ICT (representing software vendors) • VNO/NCW (representing all businesses) • Trade organisations (representing tax advisors and accountants) • Big-5 (representing the major accountant organisations) • FRC (representing the banking sector) The day-to-day management of the governance program of the project is coordinated by the cross-governmental organization Logius.
 6. How was the strategy implemented and what resources were mobilized?
With the start of SBR the strategy of ‘seduction’ was used, to convince all parties to participate. While this strategy worked to persuade the relevant organizations to become more aware of SBR, it did not succeed in getting all parties to use SBR. So, to actually make a start with SBR, the Tax Administration mandated SBR for businesses filing tax returns. This strategy is still being used when a new information chain wants to start using SBR: voluntary at first, mandatory if necessary. Other elements in the strategy to broaden the use of SBR: The growth of types of messages with the existing regulators The Tax Administration, Chamber of Commerce and the Central Bureau of Statistics use SBR to receive and send messages. Within the next few years they will include new types of messages (e.g. taxes, statistics). The growth of the number of regulators Started with the Tax Administration, Chamber of Commerce and Industry and the Central Bureau of Statistics, other regulators are joining SBR. Educational organisations (from elementary schools till universities) and housing associations use SBR to exchange annual reports. In other areas (e.g. health care, local government) promising first steps lead to next participants within the SBR governance. In-depth marketing and communication strategy SBR is sometimes seen as purely an ICT project, a technology project and with that image it is hard to get management from different organizations involved or even interested in SBR. That is why we’ve used the insights of well-known business authors from different areas to develop a new marketing and communication strategy. • Simon Sinek strongly recommends starting with Why: people don’t buy what you do, they buy why you do it. So we communicate more about smart steering and better accountability instead of SBR and its technologies. • Everett Rogers wrote about the different groups for accepting new technologies (Diffusion of innovation) and each group has specific (communication) characteristics. So, for each new sector we are entering, we’ve adjusted our strategy. • From Philip Kotler, we took the concept of ingredient branding. Just like Intel inside, we positioned SBR as a part of something bigger. After all, SBR was not a goal in itself, but was a method to contribute to something bigger. Here, the communication strategy of smart steering and better accountability perfectly blended with the ingredient branding part. Financial costs Both the SBR standards and the government SBR implementation are funded by central government as a long-term solution. SBR is included in the long-term roadmaps of several ministries. The use of SBR is mandatory for a number of reporting obligations; so funding is ensured. SBR is part of the Dutch generic digital infrastructure (DGI). SBR is a method which can be used by a large amount of organizations. Each organization can calculate for each of their information chains what the TCO is, and what results are realized using SBR. The TCO is not only calculated on the basis of investments and costs, but also takes into account the reduction of administrative burden. As an example, we describe this for Education Executive Agency (see Q8): Manual processes within The Education Executive Agency will be automated, resulting in a reduction of administrative burden of ultimately € 7,7 million per year, reduced implementation costs and by that, more money that could be spent on educational goals. This is one of several examples of public and private parties adopting SBR; resulting in a nation-wide reduction of administrative burden of ten to several hundreds of millions of Euros per year.

 7. Who were the stakeholders involved in the design of the initiative and in its implementation?
For the Netherlands, SBR is a cross-domain method. It is used by: • The Tax Administration for about 40 information chains (with 17.000 intermediaries, working for all businesses (1,5 million) in The Netherlands. • The Chamber of Commerce for the annual report that organisations (mandatory for 900.000 organisations) had to deliver to them (often via one of the 17.000 intermediaries). • The Central Bureau for Statistics for statistical information from entrepreneurs. • Education Executive Agency (Ministry of Education) for the annual report from educational organisations from all levels (elementary school to university: 1667 in total). • Intra governmental: all 11 ministries will use SBR for all financial systems concerning their yearly budget and the overall State budget. • Banks: three major banks use SBR with their business clients for credit reports. • Housing corporations will use SBR for sending their annual reports (and more) to their regulator. Standard Business Reporting is based on well-known open standards that are in use by many other countries today. The specific approach of the Netherlands – setting up public-private governance, defining data definitions, among others – is well documented and easily transferred. Currently, Australia, Finland and Sweden are also implementing Standard Business Reporting, and a number of governments are very interested in the approach (e.g. Denmark, Canada, Taiwan, Poland, Slovenia, USA). Written by academic researchers, the book “Challenging the Chain” describes the scientific and practical basis for SBR. The book has been translated into English and is available for free. Private parties, government agencies and SBR regularly present the case on international conferences. The Dutch SBR program has made an active contribution to the Action Plan for the new US administration. It concerned the formulation of the 24th recommendation "Launch a Standard Business Reporting Program that will ultimately help businesses lower costs and reporting burdens."

 8. What were the most successful outputs and why was the initiative effective?
• Reduction of administrative burden: for all organizations that have to deliver (financial) reports • Increased transparency: for government, business and society in general • Smart steering and better accountability: for receiving organizations (government, banks) as well as delivering organizations (government, businesses, schools, housing corporations, health organizations) Best practice example: Education One of the examples of successful use of SBR is the accountability of the educational institutions in the Netherlands to the Education Executive Agency (DUO) and the Education Inspectorate. Every year, 28 billion euro from the State budget is spent on education. Schools finance their educational programs with it. So far, the accountability of this large amount of money came with paper reports. That was a huge manual process for the Education Executive Agency, because schools differed in the way they built up their annual report. The Education Executive Agency must therefore spend much time looking into and comparing the paper reports, and sometimes the very things they would like to have, were not in the reports. Schools and the Education Executive Agency shared the opinion that the whole process could be done in a smarter way. It started with agreeing on what actually should be in an annual report. Hence the move to SBR was easy, as a data dictionary (taxonomy) had already been developed. The Education Executive Agency together with the school elaborated on this taxonomy to make it ready for the educational sector. The result was that an originally cumbersome process was standardized using SBR, digitized and enhanced. A smooth digital accountability process emerged which meets the requirements the government has agreed upon with private parties. Manual processes within The Education Executive Agency will be automated, resulting in a reduction of the administrative burden of ultimately € 7,7 million each year from the year 2017 and up, reduced implementation costs and by that, more money that could be spent on educational goals.

 9. What were the main obstacles encountered and how were they overcome?
The obstacles that were encountered have a rather, specific and SBR related technical background. We believe that the way we dealt with these issues is more relevant than the details of the different issues. All obstacles were dealt with in the SBR Governance: - Technical issues like the interdependence of data dictionaries, the introductions of different versions of taxonomies were addressed in the Expert Group Data - Process issues were addressed in the Expert Group Processes & Technique, like the use of (new) interfaces or issues concerning the Dutch Process Architecture. - For special, temporarily issues a Taskforce was installed like for the Annual Reporting Chain, Preparer Extensions or the Reference Classification System of Financial Information. - Coordination issues were being handled in the SBR Platform, were it is its primary task to coordinate activities in the field of SBR and to ensure that everything takes place in proper context. - The SBR Board is the decision-making body of the Dutch SBR Program. Strategic decisions are submitted via the SBR platform to the council. The SBR Board provides strategic direction to the SBR Program. Where appropriate, it will submit proposals on measures to be initiated by one or more parties to get the realization of the strategic direction within reach and maintain. In addition, the Board is the ultimate escalation level fundamental issues that concern the whole SBR Program. E.g. the SBR Board decided on the way SBR Assurance will be implemented. This involves the changes from the normal signature from an accountant to a digital signature which touches on changes for accountants (processes and technology), software vendors and legislation.

D. Impact and Sustainability

 10. What were the key benefits resulting from this initiative?
We kindly refer to our best practice example in our answer to question 8 for an example of the impact of SBR. In our answer to question 7 we have presented the domains that currently use SBR. Depending on the maturity of the information chain, similar advantages from the Education domain are applicable for other domains. For example: it is mandatory for most businesses to send their annual report to the Dutch Chamber of Commerce. Before SBR, business sent their annual report on paper, in an envelope to the Chamber, resulting in high administrative burden for businesses, accountants and the Chamber of Commerce (which has to type all the data manually into their databases). Thanks to the use of SBR, businesses –with the help of software and often their accountant- can now send their annual report directly from their financial administration to the Chamber of Commerce.

 11. Did the initiative improve integrity and/or accountability in public service? (If applicable)
Inclusive, fair societies are built on transparent, accountable institutions, fair regulations and a level playing field for businesses. SBR enables transparency and accountability by modernizing reporting. Digital reporting facilitates reporting and lowers the administrative burden, reducing the cost of doing business, and enabling innovative solutions and services. On top of this, SBR is a good example of a well-balanced governance model, allowing active participation by the private sector. As mentioned before, SBR is the standard mechanism for filing tax returns and annual reports. By using SBR’s standardization of data definitions, processes and technology, the Tax Office has been able to: • Streamline the process of converting tax law into data models, digital forms and validation rules • Highly automate the gathering of data from different sources (e.g. home ownership, private income, savings) required to validate and even pre-fill tax returns • Automate the process of receiving and validating tax returns This all contributes to efficient collection of higher-quality, reliable tax data, which enables the government to improve fair tax collection and combat tax evasion. The business register (Chamber of Commerce) uses SBR to collect annual reports in a digital, semantic format, which can be retrieved by any public or private party for consultation and further analysis. This enables businesses and investors to take better business and investment decisions and increases transparency.

 12. Were special measures put in place to ensure that the initiative benefits women and girls and improves the situation of the poorest and most vulnerable? (If applicable)
This question is not applicable for SBR.

Contact Information

Institution Name:   Standard Business Reporting
Institution Type:   Other  
Contact Person:   Geert Nederhorst
Title:   Head of Department  
Telephone/ Fax:   +31652833308
Institution's / Project's Website:  
Address:   Postbus 96810
Postal Code:   2509 JE
City:   Den Haag

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