Heritage: the priceless hostage of accrual accounting

• DOI: https://doi.org/10.1108/IJPSM-12-2018-0263
• Pages: 285-306
• Published date: 07 August 2019
• Date: 07 August 2019
• Author: Eugenio Anessi-Pessina,Josette Caruana,Mariafrancesca Sicilia,Ileana Steccolini
• Subject Matter: Public policy & environmental management

Heritage: the priceless hostage

of accrual accounting

Eugenio Anessi-Pessina

Università Cattolica del Sacro Cuore, Milano, Italy

Josette Caruana

Department of Accountancy,

Faculty of Economics Management and Accountancy,

University of Malta, Msida, Malta

Mariafrancesca Sicilia

Department of Management, Economics and Quantitative Methods,

University of Bergamo, Bergamo, Italy, and

Ileana Steccolini

Essex Business School, University of Essex, Colchester, UK

Abstract

Purpose –The purpose of this paper is to examine how the convergence of private and public sector

accounting standards is affecting conceptual and practical issues relating to heritage. More specifically, the

paper is intended to provide a better understanding of the state of the art in national and international

accounting standards on heritage assets, and of the views influencing such standards.

Design/methodology/approach –A qualitative documentary analysis is carried out to explore the variety

of existing positions and views on heritage, ranging from the scholarly literature, through potential

stakeholders and users, to international and national standard setters.

Findings –The analysis shows that the path of convergence between public and private sector standards

and practices is still problematic. After more than two decades of debate around the nature, definition,

measurement, and reporting of heritage, these issues are far from settled.

Research limitations/implications –In the light of calls for increased measurement and reporting of

public sector “assets”, and specifically for the definition of standards to recognise heritage, the paper suggests

the need to strongly reconsider whether the convergence between public and private sector standards is

desirable, feasible and effective. As such, the risks of embracing simplified or hybrid forms of accounting and

reporting for heritage should be more seriously assessed. While reporting on heritage is important, it is

fundamental to keep it distinct from reporting on government’s regular operations, in order to appreciate its

specific value, nature and features.

Originality/value –Looking at European national standards for heritage, the IPSASB’s proposals, and the

reactions to the latter by relevant stakeholders, the paper provides a pluralistic view on the positions and

experiences about heritage, contributing to the debate on the convergence between private and public sector

accounting standards.

Keywords Control, Economic benefits, Assets, Public sector accounting, Service potential

Paper type Research paper

1. Introduction

There is a wide, long-established literature documenting how the public and private sectors

are different (Rainey et al., 1976; Nutt and Backoff, 1993; Boyne, 2002) and how publicness

may affect the functioning of governments, the provision of services and the accountability

mechanisms adopted in the public realm (Lapsley, 1988; Boyne et al., 1999; Steccolini, 2019).

A parallel literature has developed in accounting scholarship, discussing the (un)suitability

of private sector techniques, standards, and perspectives for public sector accounting (e.g.

Ellwood and Newbury, 2006; Grossi and Steccolini, 2015). In practice, however, private and

public sector accounting standards appear to be on a convergence path, encouraged by the

accounting profession and by international and supranational institutions.

Received 19 December 2018

Revised 25 February 2019

30 May 2019

Accepted 30 June 2019

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

www.emeraldinsight.com/0951-3558.htm

The priceless

hostage of

accrual

accounting

InternationalJournalof Public

SectorManagement

Vol.33 No. 2/3,2020

pp.285-306

©EmeraldPublishingLimited

0951-3558

DOI10.1108/IJPSM-12-2018-0263

285

In the absence of consolidated standardsfor the public sector, and in the face of difficulties

in the recognition and measurement of items which are typically found in the public sector,

such as heritage, private sector practices and standards, or convergence towards them, have

been often suggested as a possible solution. This is evident, for example, in the IPSASB’s

approach to standardsetting, whereby “the IPSASB’s objective is to serve the public interest

by developing high-quality accounting standards […]”so as to “enhance the quality and

transparency of public sector financial reporting by providing better information for public

sector financialmanagement, accountabilityand decision making”. In pursuingthis objective,

“[…] the IPSASB supports the convergence of international and national public sector

accounting standards and the convergence of accounting and statistical bases of financial

reporting where appropriate; and also promotes the acceptance of its standards and other

publications[1]”. The interpretation of the “convergence”concept is clarified, for example, in

the IPSASB’s Strategyand Work Plan for 2019–2023, where the I PSASB’s strategicobjective

is described as “strengthening Public Financial Management (PFM) globally through

increasing adoption of accrual-based IPSAS”[2].

As such, the convergence path is strictly focussed on applying accrual-based standards,

which draw, to the extent this is deemed possible, on existing private sector standards[3].

Paradoxically, however, the reference to the private sector appears to have created new

problems, with the recognition and evaluation of such items as heritage assets becoming the

subject of endless debates among both scholars and practitioners.

This paper aims at shedding new light on how current processes of convergence are

taking place in practice. It focusses on heritage assets because, compared to other public

sector assets, their elements of publicness are particularly pronounced and are seen as an

“extreme case of accounting difficulty”(Biondi and Lapsley, 2014, p. 159). As such, the

debate on whether heritage assets can be evaluated or not (thus becoming “priceless”) has

become a never-ending issue, whereby the case of heritage assets has been taken to signify

and symbolise, alternatively, the difficulties of adopting accruals accounting and its

potential benefits. More specifically, the paper is intended to provide a better understanding

of the state of the art in national and international accounting standards on heritage assets,

and of the views influencing such standards. To this end, it explores the variety of existing

positions and views on heritage, ranging from the scholarly literature, through potential

stakeholders and users, to international and national standard setters, with a particular

emphasis on the IPSASB’s (2017a) Consultation Paper on Heritage and the related response

letters (IPSASB, 2017b). This allows an assessment of whether the (often called for)

convergence is actually taking place for heritage assets, or rather whether divergent

approaches and views are still emerging and remain alive.

The next section reviews the relevant literature. The third section describes the research

methodology. The fourth section presents the results, which are further discussed in section

five, where conclusions and implications for practice and research are drawn.

2. Literature review

This section reviews the extant literature on the accounting treatment of heritage assets,

pointing to the existence of significant contention about both the recognition of heritage assets

in the general purpose financial reports of governments and their measurement and disclosure.

2.1 Recognition of heritage assets

Heritage assets are not easy to define. The following distinctive characteristics have

generally been identified in the literature (Mautz, 1988; Barton, 2000, 2005; Adam et al.,

2011): they are characterised by historic, artistic, architectural, aesthetic, scientific,

technological, geophysical or environmental features; they are held by governments that

have the duty to conserve and maintain them in good condition for the benefit of current and

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