A new system of classification allowing charities to file accounts digitally has been developed by the Charity Commission and the Financial Reporting Council (FRC).
Before accounts can be filed digitally with the Commission, Companies House or HM Revenue & Customs, a taxonomy, or system of classification, must be developed using a standard called iXBRL. Up until now a charity-specific taxonomy has not been available, but one is now available on the FRC website.
The Charity Commission has previously stressed that it does not intend to make it compulsory for charities to file accounts in a digital format, after its consultation on the subject prompted a wave of concerns.
The system will make charity data more accessible, the Commission said, and should make it easier for charitable companies which have to file with both the regulator and Companies House.
Nigel Davies, head of accountancy services at the Commission (pictured), 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 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.”
He said evidence from Companies House suggests more work needs to be done to encourage and help charities use the option.
Burden fears
In December last year Cancer Research UK, the Chartered Institute of Management Accountants, the accountancy firm Grant Thornton and several small charity representatives were among those who expressed concern at the possibility of electronic filing becoming mandatory.
The Charity Finance Group has also said that while it believes iXBRL can be an advantage to the sector, forcing it on charities would make it burdensome.
CEO Caron Bradshaw said: “We encourage charities to engage with this move and think creatively about how iXBRL could work to their advantage.
“However, we have also always been clear that Charity Commission should be aware about not building in cost or unnecessary burden and should have a clear and honest dialogue with charities of all sizes about how iXBRL could be beneficial to the Charity Commission and therefore the sector as a whole.”
