Proposed Amendments to Heritage Assets Accounting Standard

CIGFARO workshop 28 January 2022

Disclaimer The views and opinions expressed in this presentation are those of the individual. Official positions of the ASB on accounting matters are determined only after extensive due process and deliberation.

Agenda ED 195 Proposed amendments to GRAP 103 on Heritage Assets Frequently Asked Questions resulting from GRAP 103 Post-implementation Review Other ASB Exposure Drafts available for comment

ED 195 Proposed amendments to GRAP 103 on Heritage Assets

Background ASB undertook Post-implementation review during 2020 Actions agreed by Board based on comment received include: - Amendments to GRAP 103 - Revise or new FAQs - Feedback to relevant stakeholders Progress report available on ASB website

Proposed amendments to GRAP 103 Definition of a heritage asset Classification of h/a with an alternative use Determining a reliable fair value Re-assess if a reliable value becomes available subsequent to initial recognition Aggregation of individually insignificant h/a Impairment of h/a Encouraged disclosures

Definition of a heritage asset Align description of heritage resource Def remains broad enough to allow for recognition of h/a not designated as heritage resource Amended to refer to cultural significance GRAP 103 def with legislative H/a are assets that have cultural significance, and are held indefinitely for the benefit of present and future generations

Definition of a heritage asset Characteristics displayed by h/a and range of assets regarded as h/a updated with legislative description Transitional provisions = retrospective application

Definition of a heritage asset Specific matter for comment #1 Do you support the revised definition of a heritage asset that focuses on cultural significance in paragraph .04, and the inclusion of guidance in paragraph .04A that explains when an object has cultural significance? If not, please explain why

Classification of a dual purpose h/a Amending the classification of h/a with a significant alternative use to require that all h/a should be accounted for using GRAP 103 No longer depreciation of h/a with a significant alternative use - only be assessed for impairment if an indicator has been triggered

Classification of a dual purpose h/a Changes include: delete requirement that h/a with a significant alternative use should be accounted for using another applicable GRAP new example to explain that assets used with a h/a should be accounted for using appropriate GRAP delete requirement that a h/a should reflect a heritage value and another value

Classification of a dual purpose h/a Changes include (continue): new disclosure to present info about h/a significant alternative use (if material) transitional guidance to explain at what value a reclassified h/a should be recognised on adoption of amendment Transitional provisions = retrospective application

Determining a reliable value Changes include: Allow use of peer data for entities that have no, or insufficient, sources of entity-specific data Guidance to explain that if variability in range of reasonable fair value estimates is significant and probabilities cannot be reasonably assessed fair value should not be determined

Determining a reliable value Changes include (continue) emphasise protective rights should not preclude determining a reliable value new disclosure requirements (a) description and carrying value of h/a subject to protective rights; and (b) reason for disposing h/a that is subject to a protective right Transitional provisions = prospective application

Determining a reliable value Specific Matter for Comment #3 In addressing challenges to determine a reliable value for a h/a, the ED : (a) proposes guidance on the use of peer data to allow an entity to value a h/a based on the value of a comparable h/a held by another entity; (b) includes additional guidance that explains that a protective right should not preclude entity from determining a fair value for a h/a; and (c) proposes guidance to explain that if the variability in the range of reasonable fair value estimates is significant, and the probabilities of the various estimates cannot be reasonably assessed, a fair value should not be determined for h/a. Please indicate if this guidance useful in addressing challenges with determining a reliable value for a heritage asset. If not, please explain why.

Determining a reliable value Specific Matter for Comment #4 Where a protective right is imposed on a heritage asset or a class of heritage assets, paragraph .99B proposes that an entity shall include disclosures about the nature of such protective rights, along with a description and the carrying value of the heritage asset or class of heritage assets on which protective rights are imposed. Judgement should be applied to assess if these disclosures should be provided for individual heritage assets or collections of similar heritage assets based on the nature of the heritage assets on which protective rights are imposed (see paragraph .99D). (a) Do you agree that disclosures on protective rights imposed on a heritage asset or a class of heritage assets will be relevant for accountability and decision-making. (b) In your view, will providing these disclosures be onerous? Please explain your response.

Subsequent re- assessment Proposed amendment requires entities to re- assess if reliable value becomes available after initial recognition Changes include: Entity is required to annually undertake a re- assessment if a value could not be determined on initial recognition example and a list of indicators to undertake re- assessment

Subsequent re- assessment Changes include (continue): transitional guidance explaining how h/a should be recognised when a value becomes available disclosure requirement to provide info on events or circumstances that resulted in a reliable value becoming available subsequently Transitional provisions = prospective application

Subsequent re- assessment Specific matter for comment #2 Paragraph .17B lists the indicators that an entity can apply to assess if a heritage asset can subsequently be measured reliably. Please indicate: (a) if you agree with the list of indicators. If not, please explain why; and (b) if there are any additional indicators that entities may consider.

Aggregate individually insignificant h/a Changes include: guidance that h/a do not need to be presented and disclosed on an individual basis entities may aggregate individually insignificant items guidance to explain that it may be appropriate to aggregate items when this is a more relevant representation of the items cultural significance Transitional provisions = retrospective application

Impairment of h/a Changes include: inclusion of an additional impairment indicator; and additional examples to illustrate the impairment indicators Transitional provisions = prospective application

Impairment of h/a Specific matter for comment #5: Paragraph 63 proposes amendments to the indicators that an entity considers to assess ifthere is an indication that an asset may be impaired. Please indicate: (a) if you agree with the amendments. If not, please explain why; and (b) if there are any additional indicators that entities may consider.

Encouraged disclosures Changes encouraged disclosures: (a) Information about age and condition of h/a include deletion of following (b) Disclosure of fair value of h/a that are not recognised on initial recognition (c) Disclosure of fair value where cost model is applied Transitional provisions = retrospective application

Encouraged disclosures New disclosure requirement for h/a borrowed from, or on loan to other entities (a) Description of h/a borrowed from or on loan; (b) Entity from which h/a is borrowed or to which h/a is on loan; and (c) The period for which h/a will be borrowed or on loan NB apply judgement to assess if these disclosures should be provided for individual h/a or collections of similar h/a Transitional provisions = prospective application

Any other general comment? 25

Frequently Asked Questions

FAQs Revised FAQs FAQ 7.4 How should specimens held for research be classified in an entity s f/s?

FAQs New FAQs FAQ 2.16 Will the presentation of assets in the statement of financial position increase an entity s risk profile? FAQ 2.17 Should assets on land be accounted for separately from land

FAQs New FAQs FAQ 7.8 What should be considered when determining a reliable value for a heritage asset? FAQ 7.9 How should items collected by an entity be classified in the f/s?

Other ASB Exposure Drafts available for comment

Exposure Drafts ED 194 Proposed ASB Work Programme 18 March 2022 ED 195 Proposed amendments to GRAP 103 on Heritage Assets 28 January 2022 ED 196 Proposed Due Process Handbook 31 March 2022

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