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Valuation Guidance for Cultural and Heritage Assets (2002)

3  Key Valuation Judgments for Collection Assets

There are a number of critical valuation judgments that impact on a valuation. These judgments are likely to be most effectively made through a collaborative approach involving collection managers, curatorial staff, valuers and finance officers.[1] We suggest that these judgments be discussed with auditors before the valuation process begins. It is usually possible to develop a process that meets the goals set for the project, while remaining cost effective. The planning and conduct of a valuation project is discussed later in this paper.

3.1 Identification and Classification of the Assets

Identification is the first step in establishing whether an item is an asset that can be reliably measured. The management of libraries and museums is orientated towards collections and therefore valuation should proceed based on collections.

There are three approaches in identifying individual collections: collections may be grouped by broad subject, by audience or by format.[2] Most entities use a mixture of all three approaches. It is recommended that entities adopt a pragmatic approach in grouping the collections, and try to identify as few collections as possible.[3] Record-keeping systems should be able to provide information on the number of items in each collection.

In identifying collections it may be found that some of the components (i.e. current awareness bulletins) are effectively consumed within the financial year in which they are purchased. In such cases, it would be appropriate to expense these items immediately rather than record them as part of a fixed asset.[4]

Where the valuer is required to exercise professional judgement to determine the most appropriate classification, the determination and its basis must be fully disclosed in the valuation report by the valuer.

3.2 Valuing Individual Items or Groupings of Similar Assets

When assessing the need to value a collection of items that are perceived to be of low monetary value individually, regard should be given to the potential value of the overall collection before making any decision not to undertake a valuation. For example, minerals, invertebrate palaeontology, and invertebrate zoology collections may frequently hold large numbers of items that are of low value individually but the value may be material when each collection is considered as a whole.

A collection that comprises a complete set of all known specimens may have a value that is greater than the sum of the values of the individual items. In other words, there is a premium on the completeness or comprehensiveness of the set of specimens. Where such a situation exists, the group of items should be valued as a whole.


  • [1]Guidelines on Accounting Policy for Valuation of Cultural Collection Assets, June 1998, Heads of Treasuries Accounting and Reporting Advisory Committee, Australia.
  • [2]The Valuation of Library Collections - A Proposal, page 4.
  • [3]Ibid, page 4.
  • [4]Ibid, page 4.
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