The recognition and valuation of heritage assets in the financial statements of the Maltese public sector

Abstract

This study focuses on the issues of recognition and valuation of Public Heritage Assets within the financial statements of the Maltese public sector. The research objectives are to analyse the major alternative recognition and valuation approaches for Public Heritage Assets proposed by academics and the approaches currently adopted internationally, and after assessing their applicability within the local scenario, to recommend a practical approach for the Maltese Government. The recognition and valuation of Heritage Assets in public financial statements is a contentious task for several reasons and has been the subject of a large literature. Some firmly believe Heritage Assets should not be recognised and valued in the public sector balance sheet. However, for various reasons, others are of the opinion that such assets should be recognised and valued as other fixed assets. Various valuation bases can be adopted to assign a value to Heritage Assets, and the approaches currently being adopted by various countries, vary extensively. In order to conduct this study, interviews with twenty-one local practitioners and professionals were held. The sample of the interviewees was carefully selected to elicit opinions which are representative of the Maltese society. After considering all research conducted, this study concludes that: + Heritage Assets need to be recognised and valued in the public accounts upon the introduction of accruals accounting; + Such assets need to be classified and a valuation basis needs to be formulated by government for each category; + Financial information about such non-financial assets needs to be presented separately from information pertaining to financial assets in arriving at the net debt figure for the government; + Extensive non-financial information relating to Public Heritage Assets needs to be included in the government annual report; + A special committee composed of independent persons who are representative of the Maltese society, needs to assume responsibility for such valuations; + The government needs to reconsider the current utilisation of Public Heritage Assets and take appropriate action where necessary; and + Scientific surveys need to be conducted regularly among tourists in order to ascertain the importance of the cultural heritage sector on the economy.