- This story was corrected on 8 March 2016; please see final paragraph
Charities are closer to being able to file their accounts digitally with the Charity Commission and Companies House after a successful consultation.
The commission and the Financial Reporting Council launched a consultation last October on proposed changes to the charity taxonomy, or classification system, that will define the computer-readable tags that identify pieces of financial data in accounts.
The commission said the taxonomy for charities reporting under the new FRS 102 Statement of Recommended Practice would make filing accounts quicker and easier. It would also make the information more accessible and allow more efficient analysis of the data, it says.
About 70 per cent of companies already file digital accounts with Companies House, but this was not an option for charities until the new taxonomy was introduced.
Some consultation respondents raised issues about the burden digital filing could represent for the charity sector. The accountancy firm RSM UK told Third Sector in December that the company’s experience in tagging accounts for charities to meet HMRC requirements showed the new taxonomy "generally involves more time, and therefore resource, than the equivalent process for commercial companies".
Nigel Davies, head of accountancy services at the Charity Commission, said: "The taxonomy is a fruit of our investment in this technology and our effective joint working with the FRC. 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."
Melanie McLaren, project director at the FRC, said: "We welcome the updating of the charity taxonomy from Sorp 2005 to FRS 102; in taking this step, the Charity Commission has enabled the charity sector to take the first step and report on the same digital playing field as for-profit companies.
"We would encourage the charity sector, accounting software suppliers and those interested in charity accounting to build on the taxonomy and take forward the charity sector’s reporting into the digital age."
The commission is evaluating the benefits of enabling its own digital filing option for accounts and expects to announce its plans later this year. It will accept digital, or iXBRL, accounts in the interim for display purposes.
- The story originally said charities would now be able to file their accounts digitally but this is not yet possible.