Balance sheet reprieve for cultural gems

The V&A in Kensington

The days when museums and galleries could leave their most precious items off
their balance sheets are not quite over yet, according to new standards aimed at
increasing the transparency surrounding heritage assets.

The Accounting Standards Board last week released new guidelines which
encourage, but do not force, museums, galleries and other cultural institutions
to place their collections on their books.

The board decided not to compel cultural institutions to undertake exhaustive
valuations of their collections, believing the process to be expensive, time
consuming and simply unrealistic. However, the new rules do require ongoing
maintenance and stewardship costs to be included on financial books, in an
attempt to increase transparency.

The new rules try to tackle the thorny issue of valuing what are generally
considered ‘priceless’ artifacts and vast collections. The British Museum alone
has about seven million artifacts with some collections taking up to ten years
simply to catalogue, along with unique international draws such as the Rosetta
Stone and the Elgin Marbles.

The prevailing accounting wisdom was simply to leave such assets off the
balance sheet but the ASB launched a program in 2006 aimed at changing this
culture.

The new rules were announced as Greece used the opening of its Acropolis
Museum in Athens to repeat its call for the Elgin Marbles to be returned. Museum
director Dimitris Pantermalis said the museum’s opening provided an opportunity
to correct ‘an act of barbarism’.

There is some historic precedent for valuing cultural assets. Stonehenge in
Wiltshire, which this week attracted 35,000 campers to the prehistoric site to
experience the summer solstice, was valued and sold for £6,000 in 1915, shortly
before being bequeathed to the public.

ASB project director Alan O’Connor said the new rules were no silver bullet
but nevertheless represented a step in the right direction and were aimed at
changing a culture which has seen large historic and artistic collections being
unaccounted for on balance sheets.

‘The main difference is the new disclosure rules which will provide much more
information on an entities holding of heritage assets,’ he said. ‘There are two
problems really ­ the technical difficulty in obtaining a valuation, because
these assets are unique and there is no established market, and the second issue
is cost…the cost of getting the valuation and the resources that would need to
be put into it.’

ASB chairman, Ian Mackintosh, said he hoped the new reporting standard would
lead to better financial management in the arts’ sector. ‘A museum’s collections
and exhibits are its greatest assets, yet under the current accounting practice
many museums and galleries publish accounts that do not adequately reflect the
collections that they exist to safeguard and preserve,’ he said.