The paradox of accounting for cultural heritage: a longitudinal study on the financial reporting of heritage assets of major Australian public cultural institutions (1992–2019)

Abstract

PurposeThe monetary valuation of cultural heritage of a selection of 16 major public, not-for-profit Australian cultural institutions is examined over a period of almost three decades (1992–2019) to understand how they have responded to the paradoxical tensions of heritage valuation for financial reporting purposes.Design/methodology/approachAccounting for cultural heritage is an intrinsically paradoxical practice; it involves a conflict of two opposite ways of attributing value: the traditional accounting and the heritage professionals (or curatorial) approaches. In analysing the annual reports and other documentary sources through qualitative content analysis, the study explores how different actors responded to the conceptual and technical contradictions posed by the monetary valuation of “heritage assets”, the accounting phraseology of accounting standards.FindingsFour phases emerge from the analysis undertaken of the empirical material, each characterised by a distinctive nature of the paradox, the institutional responses discerned and the outcomes. Although a persisting heterogeneity in the practice of accounting for cultural heritage is evident, responses by cultural institutions are shown to have minimised, so far, the negative impacts of monetary valuation in terms of commercialisation of deaccessioning decisions and distorted accountability.Originality/valueIn applying the theoretical lens of paradox theory in the context of the financial reporting of heritage, as assets, the study enhances an understanding of the challenges and responses by major public cultural institutions in a country that has led this development globally, providing insights to accounting standard setters arising from the accounting practices observed.

Accounting as Technical, Social and Moral Practice: The Monetary Valuation of Public Cultural, Heritage and Scientific Collections in Financial Reports

“…Indeed, for accounting to 'enable the flourishing of organisations, people and nature' (Carnegie et al 2021a(Carnegie et al : 69, 2021b, it is necessary that the accounting profession accept responsibility and accountability for the impacts associated with their actions and inactions. To this end, the following key question is posed by Ferri et al (2021Ferri et al ( : 1003: 'Will the international accounting profession, represented by IFAC, especially … by the IPSASB, prove to be sufficiently accountable, or not, in making its next move on this now longstanding international accounting controversy?' .…”

“…It was agreed at the time that 'the custodianship function' was all-important in the organisational and social context of the NLNZ, and it has never been provided with powers providing the 'unrestricted control of resources' (Carnegie and West 2005: 912). Ferri et al (2021) found that none of the 16 cultural institutions included in their sample used or referred to the newly developed valuations when addressing their annual results and activities between 1992 and 2019. According to these authors, the pragmatic approach of Australian cultural institutions of 'doing' mandated financial valuations, but not 'speaking' about the annual report, as a key accountability device, seems to date to have been helpful in softening or diminishing the foreshadowed unintended or negative impacts of heritage financial valuation.…”

“…Evidence from practice shows that the residual cases usually refer to human remains, secret sacred objects and culturally sensitive assets. In these instances, the exclusion from monetary valuation for financial reporting purposes is now seen as generally accepted practice (Ferri et al 2021). However, artefacts in public collections of public cultural institutions are all conceptually recognised as significant in the memory of past actors as contributors to civilizations and conditions.…”

“…-Simone Weil, La Condition Ouvriere, 1951 I n 2015, the Sydney-based Museum of Applied Arts and Science (MAAS) wrote down its heritage collection, by almost a quarter of its monetary valuation, following the decision to exclude the Boulton and Watt steam engine from valuation on the basis that it was 'unique and not able to be measured reliably' (MAAS 2015: 41). Of note, the write down was only partially absorbed by the valuation reserve, thus leading to an operating loss for the year of about $68 000 (Ferri et al 2021). This case reveals how an apparently technical problem relating to the monetary valuation of heritage assets (the difficulty to measure reliably) may lead to unintended consequences, while also casting light on the existence of different systems of values.…”

Accounting and First Nations: A Systematic Literature Review and Directions for Future Research

“…To some extent, the complexities of accounting for IH-CAs have been captured by wider debates on the recognition of internally generated intangible assets (Barth 2018;Bodle et al 2018;Lev 2018), or the treatment of heritage assets by public institutions (Woon et al 2019). The contradiction in assigning monetary values to irreplaceable heritage assets has been debated extensively since the 1990s (Carnegie and Wolnizer 1995;Carnegie and Wolnizer 1997;Hone 1997;Wild 2013;Ferri et al 2021), so it may be questioned whether the experiences of First Nations entities merit additional consideration. Whereas much of this debate has focused on the practical considerations of recognising market value for public goods and the prohibitive cost of obtaining an independent valuation (Wild 2013;Ellwood and Greenwood 2016), the issue for measuring IHCAs relates to deeper cultural interpretations of what constitutes an asset and what gives an asset its value.…”