The changes brought about by FRS 30 are not significant, although the disclosure requirements are more onerous than currently required.

Financial Reporting Standard 30 (FRS 30), Heritage Assets, was published in June 2009 after several years of consultation and two exposure drafts. FRS 30 applies for periods beginning on or after 1 April 2010, although early adoption is encouraged.

The purpose of FRS 30 is to improve disclosure in relation to heritage assets and ensure that heritage assets are shown on the balance sheet where information on cost or valuation is available. The changes in accounting for the charities sector are not significant, as the concept of heritage assets was introduced in SORP 2005, although the disclosure requirements are more onerous than currently required under the Charities SORP.

Definition

The definition given by the standard is similar to the SORP definition. "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."

The second part of the definition is perhaps the most important. Just because something is old does not mean it is a heritage asset. For example, a school that operates out of an historic building is not using and maintaining the building as a heritage asset and should account for the school building as a normal asset (FRS 15) rather than a heritage asset (FRS 30).

Works of art owned by a museum or gallery and maintained for their contribution to culture would fall within the scope of this standard. But similar pieces of art could be held by a charity that stores the collection out of sight and considers the assets to be investments; they would then not be heritage assets.

Presentation

FRS 30 requires that heritage assets are reported on the balance sheet separately from other tangible assets. Donated heritage assets should be included at their value as at the date of donation, if it is possible and practical to obtain such a valuation. Depreciation should be provided if the asset has a finite life, although it is accepted that many heritage assets have indefinite lives or very high residual values, making depreciation immaterial.

Heritage assets may also be re-valued and stated at their valuation rather than their original cost. If the assets are held at valuation, the valuations must be kept up to date and the cost of such valuations may make this option unattractive.

Disclosure

It is the disclosure requirements of this standard that are more onerous than the requirements of the SORP.

Detailed disclosures are required whether or not the assets are shown on the balance sheet. The notes to the accounts must include the charity's policy for acquisition, disposal, measurement, preservation and management of its heritage assets, including a description of records kept and the extent to which public access is permitted.

For assets held at valuation, the accounts must disclose the date and method of the valuation, whether the valuer is internal or external, the name and qualification of an external valuer, and any significant limitations of the valuation, for example where the effect of an asset's provenance is not fully reflected in the valuation figure.

The notes should also include a five-year summary of transactions disclosing for each period the cost of acquisitions, the value of donated heritage assets, the carrying value and proceeds of disposals and any impairments recognised in the year. This five-year summary could potentially involve a significant amount of work to create in the first year of application although the standard does allow for it to be built up over a period of four years. That is, to provide only current year and prior year data in the first year if it is not practicable to obtain the historic information.

For all disclosures the standard requires that assets on the balance sheet are reported separately from those not on the balance sheet.

In theory this should not affect charities greatly. However, our review of various charity accounts shows that narrative disclosures are relatively sparse and we expect to see more reporting.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.