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Financial reporting standard 30 (FRS30) - heritage assets - 2009-07-13

FRS30 has recently been issued and is effective for accounting periods starting on or after 1 April 2010 although earlier adoption is encouraged. The FRS covers the disclosures that apply to all entities that hold heritage assets, whether or not the assets are reported on the balance sheet. The FRS seeks to encourage a valuation approach and as such allows Boards of Trustees/Directors to use internal valuations without the need for a full valuation every five years.

A heritage asset is defined as: "a tangible asset with historical, artistic, scientific, technological, geophysical or environmental qualities that is held and maintained principally for its contribution to knowledge and culture". Whilst FRS30 is aimed particularly at museums and preservation trusts, other entities such as schools may be caught by its provisions in respect of 'off balance' items such as historic buildings or collections of artefacts or paintings.

FRS30 requires the following disclosures to be made for all heritage assets, with additional requirements depending on whether the assets are, or are not, included as assets on the balance sheet:

an indication of the nature and scale of heritage assets held by the entity.
the entity's policy for the acquisition, preservation, management and disposal of heritage assets (to include a description of the records maintained and the extent to which access is permitted).
where assets are not reported on the balance sheet the reasons why and an indication of the significance and nature of those assets.
the accounting policy for heritage assets including the measurement bases used (if the assets are included on the entity's balance sheet).
where assets are reported on the balance sheet a note showing the cost or value at the beginning and end of the financial year with all disposal and acquisition transactions; sufficient information must also be given about the valuation methods used.
information 'that is available to the entity and is helpful in assessing the value of those heritage assets that are not included on the balance sheet' - it is not clear whether this would include insurance values.
a summary for the current and the previous four years of all transactions in heritage assets. This note should show separately transactions in assets that are reported on the balance sheet and those that are not. For example where a collection not previously reported on the balance sheet is sold during the year, the transaction would need to be disclosed together with the proceeds received.
any donations of heritage assets received during the year and if it is not practical to obtain a valuation of the asset, the reasons why should be stated.

Trustees/Directors may make valuations by any method that is appropriate and relevant, and this does not need to be by an external expert.

Depreciation need not be provided on heritage assets which have indefinite lives, although impairment reviews should be carried out and impairments recognised in accordance with FRS11 - Impairment of fixed assets and goodwill.

FRS30 provides a number of examples of disclosures where heritage assets are or are not included on the balance sheet. All the examples relate to museums or preservation organisations but could be adapted to cover the circumstances of other entities.

Organisations should be thinking now about whether they own any assets that could be classified as heritage assets, particularly if they have not been disclosed previously. Where such assets exist, early consideration should be given to how the organisation will implement the disclosures required under FRS30 next year; particularly given the requirement to summarise all transactions for five years in total.

If you require any help or further information please contact Sarah Morrison, Charities Partner on 020 7516 2266 or by email on smorrison@littlejohnllp.com