Accounting for heritage assets. An analysis of governmental organization comment letters on the IPSAS consultation paper

• Date: 18 July 2019
• Pages: 307-322
• DOI: https://doi.org/10.1108/IJPSM-12-2018-0275
• Published date: 18 July 2019
• Author: Natalia Aversano,Johan Christiaens,Paolo Tartaglia Polcini,Giuseppe Sannino
• Subject Matter: Public policy & environmental management

Accounting for heritage assets

An analysis of governmental organization

comment letters on the IPSAS

consultation paper

Natalia Aversano

Department of Mathematics, Computer Science and Economics,

University of Basilicata, Potenza, Italy

Johan Christiaens

Department Accounting,

Corporate Finance and Taxation, Ghent University, Gent, Belgium

Paolo Tartaglia Polcini

Department of Management and Innovation Systems,

University of Salerno, Fisciano, Italy, and

Giuseppe Sannino

Department of Economics, University of Campania Luigi Vanvitelli, Capua, Italy

Abstract

Purpose –Taking into consideration the lively debate about recognition, measurement, and disclosure

criteria for heritage assets (HA) in financial reporting, the purpose of this paper is to examine the comment

letters submitted by governmental organizations regarding the consultation paper (CP) on HA in order to

understand what is the position of the governmental organizations in relation to critical issues of the

accounting and financial reporting of HA.

Design/methodology/approach –From a methodological point of view, a content analysis wasperformed.

First, the responses were classified according to level of agreement with the 13 items included in the CP on

HA; second, the arguments adduced by respondents in supporting or contradicting the proposed approaches

and definitions have been investigated.

Findings –The majorityof responses came from countries with relevantdifferences in culture,administrative

traditionsand accountingsystems. Governmentalorganizations stronglyagreed with therecognition of heritage

items as “assets”in financialreporting, while conflicting positions on measuring bases wereidentified.

Originality/value –This study is one of the few studies based on the content of the comment letters

received in response to the CP on HA. The present study can also give an idea of the content of the future

IPSAS on HA. Moreover, it is the first study attempting to enrich the debate on governmental organizations’

participation to the IPSAS standard-setting process.

Keywords Measurement, Heritage assets, Disclosure, Accountability, Recognition, IPSAS,

Consultation paper, Governmental organization

Paper type Research paper

1. Introduction

One of the traditional responsibilities of public organizations is the protection of heritage

assets. HA are elements such as historical buildings, monuments, archeological sites,

conservation areas, nature reserves, and works of art that generally define the cultures,

histories and identities of countries. Governments have the responsibility to preserve and

protect these assets and their value for both current and future generations as well as to

provide financial reporting and information about the assets.

HA are recognized in governmental financial reporting, since users are interested in assessing

how governmental entities manage public resources (Rowles, 1992; Mack and Ryan, 2006).

HA are items with specific qualities that cannot be replicated, and that have an indefinite

lifespan. They are mainly held by the public sector and not by for-profit entities, and they

Received 28 December 2018

Revised 22 March 2019

Accepted 3 May 2019

The current issue and full text archive of this journal is available on Emerald Insight at:

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Accounting for

heritage assets

InternationalJournalof Public

SectorManagement

Vol.33 No. 2/3,2020

pp.307-322

©EmeraldPublishingLimited

0951-3558

DOI10.1108/IJPSM-12-2018-0275

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differ from other kinds of assets inthe value they derive from being impossible to reproduce

and substitute; they are highlyunlikely to be traded.Such elements are very difficult to handle

appropriately within normalized accounting systems designed for decision makers (Carnegie

and Wolnizer, 1999; Barton, 2000).

Therefore, accounting for HA is a relevant issue (Adam et al., 2011) that raises concerns

about proper definition of HA; processes for recognizing HA in financial reporting

statements; measurement criteria for HA; and additional information to be disclosed.

Notwithstanding a prolific body of literature (Mautz, 1988; Pallot, 1990; Rowles,

1992; Stanton and Stanton, 1997; Carnegie and Wolnizer, 1999; Agasisti et al., 2015;

Herguner, 2015) and several national standard setters’attempts (FASAB, 2005; ASB,

2009) to tackle these matters, no agreed-upon definition or accounting treatment has been

reached to date.

At the moment, the accounting treatment of HA has been covered by IPSAS 17

(Property, Plant and Equipment) but previous research (Aversano and Christiaens, 2014;

Aversano et al., 2019) revealed that this standard does not respond sufficiently to users’

information needs regarding HA. In particular, civil servants are interested in good

financial reporting of HA because they are accountable to both the government and the

electorate for sound management of such public goods (Sinclair, 1995). IPSAS 17 is mostly

atranspositionofIAS16–which was issued by IASB for tangible assets held in the

private sector –and cannot provide a definitive solution to the HA accounting problem,

leaving the choice of which accounting approach to adopt to public sector entities.

This has resulted in a variety of practices in different jurisdictions and, consequently,

reduced comparability.

In April 2017, IPSASB released a consultation paper titled “Financial Reporting for

Heritage in the Public Sector”(the CP on HA). The IPSASB aims to receive views from

constituents in order to provide guidance on this topic, and thereby to meet the information

needs of generalpurpose financial report (GPFR) users. The CP gathered 40 commentletters.

In light of this theoretical framework, this paper intends to join the debate on HA

reporting by carrying out a content analysis of comment letters submitted by governmental

organizations regarding the CP on HA in order to investigate preferences in relation to some

critical points, such as the definition, recognition, measurement and disclosure of HA.

The paper is organized into six sections, including the present introduction: the second

section illustrates accounting problems in valuation, recognition and disclosure of HA; the

third provides a background on governmental organizations’participation in the standard-

setting process; the fourth describes the research questions and methodology; the fifth

presents and discusses the results; and the last section provides discussion and conclusions

as well as highlights further developments of the research.

2. The scientific debate about recognition, evaluation and disclosure

of heritage assets

There are many definitions of cultural and artistic assets by both Anglo-Saxon and

European countries; the concept of cultural and artistic heritage has also been clarified by

supranational organizations such as the United Nations Educational, Scientific and Cultural

Organization (UNESCO) and the International Council of Museums.

Despite the variety of interventions designed to define them, there is strong divergence on the

definition of HA. The problem is that a generally accepted definition does not formally exist yet,

and some criteria have been applied specifically in order to include assets in the heritage

category. IPSAS 17 states that “some assets are described as heritage assets because of their

cultural, environmental or historical significance,”providing specific examples and

characteristics. More broadly, UNESCO, at the 1972 Convention Concerning the Protection of

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