The accounting standards does not provide a specified definition of heritage assets but it is generally understood that such assets tend to be found at places such as museums or exhibition centers. However, there has been a lot of controversy on whether heritage asset should be included in the financial statements for reporting purposes or not. For every argument in support of whether heritage asset should be in the financial statements, a valid counter-argument is provided as to why it should not be presented in the financial statements. Pertinent to research journals on heritage assets, this reflection discusses my views on why I disagree with ideas presented in the journal, how I reconcile my personal views in relation to the conceptual framework and my views outside the scope of the hints provided.
While
reading the journal article 'Knowing the price of everything and the
value of nothing: Accounting for Heritage Assets' by Kearins
and Hooper (2003), I disagree with the notions put forth by Carnegie and
Wolnizer (1999) who argue that heritage assets should not be recognized for
reporting purposes. Although their ideas seem convincing enough, it needs to be
understood that heritage asset is still a significant component of asset under
an entity’s control. Anything under an entity’s control should be reported in the
financial statements, whether they are being utilized to generate revenue or
not. Such disclosure is required for entities which prepare general purpose
financial statement. Not doing so would render an incomplete picture of the
entity’s possessions. Even though heritage assets have a cultural value and
considered indispensable, they have been assigned a monetary value so that they
can quantified. Just like land or building, the price and value of heritage
assets also gradually increase.
Furthermore, in
order for heritage assets to qualify for reporting purposes, accountants should
carefully consider the definition criteria of assets issued under the new
conceptual framework. If heritage assets falls within the proximity of the new definition
criteria, then they should be duly reported in the financial statements for
disclosure. The conceptual framework issued in 2010 introduced the concept of
economic benefit which initially meant that an item of asset is generally used
to generate cash for the entity. While most heritage assets are used to
generate income, it is fairly easy to present them in the financial statements.
Examples of such assets are artefacts curated at museums where people are
required to pay a fee in order to see them, whether it’s the highly priced Mona
Lisa or the Lapita Potteries preserved at Sigatoka Sand Dunes or at the Fiji
Museum. People
who support recognition (Rowles, 1991; Micallef and Peirson, 1997) argue that
faithful representation is impossible if a monetary value is not assigned. Heritage assets in Fiji are regarded as
public goods and are taken care of by the Fiji Heritage Council.
As
a student of accounting, having read and analyzed a few articles and reports on
heritage assets, I now feel that they should be reported in the financial
statement for the purpose of disclosure although they hold a cultural
significance. Having not done so would defeat the entire purpose and
requirements of Presentation and Disclosure under the revised conceptual
framework issued by IASB in 2018. This would ensure that proper insurance is
maintained to cover the loss of such asset in case if damages are sustained and
would enable the users to provide more stakeholder support for heritage assets.
(Disclaimer: this article was initially submitted to the School of Accounting and Finance as part of my research write-up)
(Approx. 525 words)
References:
Carnegie, G.D. and Wolnizer,
P.W. (1999), “Unravelling the rhetoric about the financial reporting of public
collections as assets”, Australian Accounting Review, Vol. 9 No. 1, pp. 16-21.
Hooper, K., & Kearins, K. (2005). Knowing
“the price of everything and the value of nothing”: accounting for heritage
assets. Accounting, Auditing & Accountability Journal, 18(3),
415-417.
Micallef, F. and Peirson, G.
(1997), “Financial reporting of cultural, heritage and scientific collections”,
Australian Accounting Review, Vol. 7, pp. 31-7
Rowles, T. (1991),
“Infrastructure and heritage asset accounting”, Australian Accountant, Vol. 61
No. 6, pp. 69-74.