Updating the definition of "collections"
FINANCIAL REPORTING INSIGHTS |
The Master Glossary of the Financial Accounting Standards Board Accounting Standards Codification (ASC) currently defines “collections” as works of art, historical treasures or similar assets that meet all of the following criteria:
- They are held for public exhibition, education or research in furtherance of public service rather than financial gain.
- They are protected, kept unencumbered, cared for and preserved.
- They are subject to an organizational policy that requires the proceeds of items that are sold to be used to acquire other items for collections.
A recently proposed Accounting Standards Update (ASU) would modify the third criterion in this definition to allow the proceeds from sales of collection items to be used to support the direct care of existing collections, in addition to the acquisition of other items for collections. This modification would eliminate the diversity in practice between the application of the definition in the ASC compared with the definition many entities use for operability and accreditation purposes.
The proposed ASU, Not-for-Profit Entities (Topic 958): Updating the Definition of Collections, is available for comment until August 10, 2018.