When should heritage assets be recognised? 

The IPSASB proposes in ED 78 on IPSAS 17 on Property, Plant and Equipment (published locally by the Board as ED 190) to include guidance on heritage assets. The ED proposes that a heritage asset should be accounted for using IPSAS 17 when it meets the definition of property, plant and equipment.

When will a  heritage asset be recognised?

A heritage asset is an item that is controlled by an entity, and has service potential or the ability to generate economic benefits. For an item of property, plant and equipment to be recognised as an asset:

a. it should be probable that future economic benefits or service potential associated with the item will flow to the entity; and

b. the cost or current value of the item should be measured reliably.

Guidance on control

ED 78 includes non-authoritative guidance to assist entities with their assessment of control. The guidance was developed in response to questions raised by stakeholders when the Consultation Paper was issued for comment. The guidance will ensure that entities consistently apply the principles in IPSAS 17 when assessing control of a heritage asset. ED 78 clarifies that an entity:

a. does not control items in a heritage collection when an arrangement gives it the right to hold the items temporarily for a defined period. This is because the entity does not have the ability to use the items itself, or direct others to use, or not use, the items to derive service potential or generate economic benefits;

b. controls items in a heritage collection in an open-ended arrangement that gives the entity the right to hold the items for an indefinite period, even though the entity does not have legal ownership. This is because the entity is able to use the item, or direct others to use the item to derive service potential or generate economic benefits; and

c. controls a heritage asset or collection, even though it holds the asset or collection in storage, instead of displaying it to the public. This is because the entity’s decision to hold the asset or collection in storage does not affect its control over the resource.

When will a heritage asset not be recognised?

ED 78 acknowledges that an entity may hold heritage assets that meet the definition of property, plant and equipment which cannot be recognised. This is because the cost or current value of the heritage asset cannot be measured reliably. When a heritage asset is not recognised, ED 78 proposes that an entity should disclose:

a. the difficulties in obtaining a reliable measurement that prevented recognition; and

b. the significance of the unrecognised asset(s) in relation to delivery of the entity’s objectives.

When information about a heritage asset becomes available at a later point that enables an entity to determine a value, the heritage asset will be recognised from that date using IPSAS 17.

How to provide comment on the ED

The Secretariat will host an education session, and a roundtable discussion on ED 78 during August and September. In the education session we will work through the proposals in ED 78, while the roundtable discussion will give participants an opportunity to share their comments and views and provide any other feedback on the IPSASB’s proposals. This feedback will be used to formulate a comment letter which will be submitted to the IPSASB. If you are interested in attending these session, please forward your details to elizna@asb.co.za.

ED 78 is published on the ASB’s website and can be accessed here: https://www.asb.co.za/comment-on-proposals/.

Comment can be submitted to the Secretariat of the ASB at info@asb.co.za, by 1 October 2021.

Disclaimer

The article has been prepared by the Secretariat of the ASB for information purposes only. It has not been reviewed, approved, or otherwise acted on by the Board.