FASB Could Align Definition of a Collection with U.S. GAAP
When the Financial Accounting Standards Board (“FASB”) meets tomorrow, board members may align U.S. GAAP’s definition for “collection” with the American Alliance of Museums’ (“AAM”) definition. The decision would address museums’ struggles with determining the value of art collections and artifacts in complying with the AAM’s policies since the organization grants museum accreditations. Museums also seek GAAP-compliant statements.
To be considered a collection, artwork and historical treasures must be used for public exhibition, education, or research for public service and not financial gain; protected, cared for, and preserved; and bound by a policy requiring that the sales proceeds be used to purchase other collectibles. The criterion requiring sales proceeds being used to buy other items for collection, however, does not reflect the alliance’s guideline that the sale of a collection can also be used for the direct care of current collections. As a result, museums have been confused about what is in the AAM’s policy set against the FASB’s definition of a collection under ASC Topic 958.
FASB supervising project manager Rick Cole said research staff members discovered no occurrences where auditors asked about a museum being unable to meet the U.S. GAAP’s definition of a collection. Cole noted, however, that numerous art, science, and historical society museums have asked that the U.S. GAAP definition follow industry guidelines.