In March 2019 The Financial Accounting Standards Board (FASB) issued accounting Standards Update 2019-03 "Updating the Definition of Collections". This update was issued as a result of concern that the term collections in the master glossary of the FASB Accounting Standards Codification is not fully aligned with the definition used in the American Alliance of Museums' "Code of Ethics for Museums".
The amendments in this update modify the definition of the term collections and require that a collection-holding entity disclose its policy for the use of proceeds from when collections are deaccessioned (that is removed from a collection). If a collection-holding entity has a policy that allows proceeds from deaccessioned collection items to be used for direct care, it should disclose its definition of direct care.
The FASB believes the amendments in this update improve GAAP because they eliminate the diversity in practice that exists. Moreover, using the proceeds from deaccessioned collection items toward direct care better aligns the mission of many entities. Further, aligning the definition and permitting proceeds to be utilized for the care of existing collections are consistent with the basis for conclusions in Statement #116 of the FASB "Accounting for Contributions Received and Contributions Made" regarding the care and preservation of collections.
The amendments in this update apply to all entities and are effective for annual financial statements issued for fiscal years beginning after December 15, 2019.
About the author
Joe is a 2004 graduate of Mount Saint Mary's University, with a bachelor's degree in accounting. He is also a 2000 graduate of Archmere Academy in Claymont, Delaware. Joe started with the firm in 2002 as a part-time intern, joining full-time in 2004.
Since then, he has worked with a myriad of clients, including entrepreneurial firms, agricultural businesses and nonprofit entities, including those with OMB A-133 audits. Joe, along with the firm, contributes to Toys for Tots, Goodwill Industries, as well as several other community organizations. He is a member of the American Institute of Certified Public Accountants and the Delaware Society of Certified Public Accountants.
Flash Sale! Subscribe to Delaware Business Times and save 50%.