The Charity Commission, the independent regulator of charities, and the Financial Reporting Council have launched the new taxonomy for charities.
The taxonomy is the essential pre-requisite to charities choosing to file their accounts digitally with Companies House and the commission. In filing digitally, charities can make the tagged charity data more accessible.
Currently over 70 per cent of companies file digital accounts with Companies House but up to now this has not been an option for charities. Both the commission and Companies House are actively evaluating digital filing with the intention of enabling digital filing for charitable companies and thereby making accounts filing easier and quicker for those charities that have to file with both the commission and Companies House.
In addition anyone using digital accounts will be able to extract the tagged reporting and accounting information that they want and analyse it more efficiently. Those charities filing tax returns with HMRC will also benefit from having the option of digital filing when submitting supporting accounting information.
Digital data dictionary
The charity taxonomy is a type of digital data dictionary which defines the computer-readable tags that identify individual items of data in charity reports and accounts for electronic filing and for other analytical purposes. This could potentially make information from the trustees’ annual reports and charity accounts more accessible and thereby enhance the accountability and transparency of the charity sector. Future benefits of this technology might include simplifying the submission of the annual return by automatically using the computer readable information contained in the digital filing of tagged accounts.
The option to file accounts by PDF will remain but the commission notes the popularity of digital filing by companies with Companies House and wishes charities to benefit from having this accounts filing option too. The commission recognises that enabling ‘tagging’ and submission of digital (iXBRL) accounts is a first step. The experience of Companies House suggests that, in order to encourage the take-up of digital filing, accounts templates would be needed to assist and support smaller charities in choosing to file digitally.
The commission is evaluating the potential benefits of enabling its own digital filing option for charity accounts and anticipates announcing its 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.
Fruits of investment
Nigel Davies, head of accountancy services from the 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.”
The taxonomy can be viewed and downloaded from the FRC’s website.
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