Creation of specialised taxonomy by Charity Commission and Financial Reporting Council provides basis for online submission of accounts
The prospect of charities being able to file their accounts with Companies House and the Charity Commission through digital channels has moved closer with the creation of a taxonomy to support the process.
The commission, which is the independent regulator of charities in the UK, has launched the taxonomy in an initiative with the Financial Reporting Council (FRC), the regulator in charge of corporate governance.
It will provide a digital data dictionary for the charities sector, defining the computer-readable tags that identify individual items of data in charity reports and accounts. This is one of the prerequisites of electronic filing and making the information available for analytics.
Although more than 70% of companies now file digital accounts with Companies House, the lack of an appropriate taxonomy has prevented charities from following suit.
Now the Charity Commission and Companies House are evaluating digital filing for charities, which they believe would be quicker and easier than doing so on paper, and would make accounts more accessible. In turn, this would help to improve accountability and transparency in the sector.
They said that future benefits might include simplifying the submission of annual returns by automatically using the computer readable information contained in the digital filing of tagged accounts.
Nigel Davies, head of accountancy services at the Charity Commission, said: “With 35,000 charities having to file their accounts with us and Companies House it made sense to open the door to digital filing as an option for charities.
“In going forward, we are very interested in understanding more about both the demand from users of charity reports and accounts for digital data, and the appetite the sector has for making digital filing a reality.”
The commission added that the creation of the taxonomy is a first step. The experience of Companies House suggests that, to encourage the take-up of digital filing, smaller charities would need an accounts template.
In addition, the commission is evaluating the possibility of its own digital filing option for charity accounts and expects to announce plans later this year.
In the interim, the commission can currently accept digital (iXBRL) accounts for display but has no capability to use or make that data available.
It also said that charities will still have the option to file accounts on PDF documents.
Image from GOV.UK, Open Government Licence v3.0