Are challenges experienced with determining a reliable value for your heritage assets?

Are you one of the stakeholders that experience challenges in determining a reliable value for a heritage asset on initial recognition? Or subsequently when the entity has adopted the revaluation model for heritage assets? 

Stakeholders shared their issues with the ASB during the post-implementation review of GRAP 103 on Heritage Assets.

The ASB proposes addressing these concerns by including guidance in GRAP 103 to explain the circumstances under which a reliable measure cannot be determined. If a reliable measure cannot be determined,  recognising the heritage asset is not required. A reliable value cannot be determined when the variability in the range of reasonable, fair value estimates is significant, and the probabilities of the various estimates cannot be reasonably assessed.

The ASB also proposes amending GRAP 103 to allow an entity to determine the value for a heritage asset by considering the value of a comparable heritage asset, held by another entity. A heritage asset is comparable if it is  similar, demonstrates the same characteristics and is in the same condition as the heritage asset that needs to be valued.

These proposed amendments are included in ED 195 on Proposed Amendments to the Standard of GRAP 103 on Heritage Assets that can be accessed by using the following link.

Stakeholders also had concerns about determining a reliable value for certain heritage assets, such as archaeological or palaeontological collections. The Board noted that legislation grants entities that hold these assets protective rights. Protective rights are imposed on an entity to  preserve heritage objects for current and future generations. Protective rights do not preclude an entity from determining a reliable value as these heritage assets can still be traded in an active market between a willing buyer and seller, despite these protective rights.

Do you agree with this conclusion? Let us know what you think by sharing your views on ED 195.

To address practical issues on the valuation process where an entity uses an appraiser to determine a value for a heritage asset, the National Treasury has commenced work on developing guidance to address practical issues. To stay informed with the development of this guidance visit the OAG’s website on https://oag.treasury.gov.za/Pages/default.aspx.

This has been prepared by the Secretariat of the ASB and not the Board.