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Re: Assets and accounting for archives



"Presumably some accountant in the Finance Dept. is depreciating these
assets, while simultaneously creating a fund to offset this depreciation for
replacement purposes ..."  This is what I see as part of the problem -- and
the difference.  Computers, furniture, buildings, etc. do depreciate and
that's why depreciation schedules are drawn up.  Books in a library's
collection, don't depreciate in the same way, though, of course, they go out
of fashion and/or deteriorate.  Assuming the book remains in print, or is
widely available from used books sources, it can always be replaced as
needed.  But the same does not apply to manuscripts (and museum artifacts)
which, for the most part, are unpublished, unique, and/or ephemeral.  Their
value, both as research materials and in the "Antiques Roadshow" monetary
sense, does not depreciate unless they are damaged which is why we are all
so concerned about proper storage and handling, and they cannot normally be
replaced if lost.  So I don't think they belong in that class of "assets"
that gets included on financial statements.

This discussion was started a day or two ago by a question concerning
monetary appraisal.  My response there, in part, for those who may have
missed it was as follows:  "The valuing of collection items so they can show
up on annual report seems a dangerous practice to me.  It would appear to
suggest that collection items have a cash equivalent value and, as such,
they could, for instance, be used as collateral against a loan, or even sold
to provide funds to cover operating expenses.  The worst case scenario of
this would be something like selling off all the collections to pay for the
construction of a new building meant to house the collection, or a creditor
taking possession of collection items because you defaulted on a loan."

Peter K and Jim G., does that help explain my position?  To Cecelia H. who
wanted to know where she could find this in print, I can't quote a source,
but think it will be found in publications by the American Association of
Museums which discuss the museum ethics and museum registration practices.

Catherine Bruck
University Archivist
Illinois Institute of Technology
Paul V. Galvin Library
35 W. 33rd St.
Chicago, IL  60616
312/567-6840
FAX 312/567-5318
bruck@iit.edu


-----Original Message-----
From: Archives & Archivists [mailto:ARCHIVES@LISTSERV.MUOHIO.EDU]On
Behalf Of Judith Turner
Sent: Thursday, April 25, 2002 11:03 AM
To: ARCHIVES@LISTSERV.MUOHIO.EDU
Subject: Assets and accounting for archives


For the past several years, the Milwaukee Public
Museum's Finance Dept. has required me to budget for
the purchase of library books n the museum's capital
budget, rather than its operating budget.  This is due
to a change in accounting rules.  Since books have a
useful life of more than one year, and we don't buy
the same title over and over  - they are now treated
as capital assets rather than as expendables.  Were we
to purchase a manuscript or a collection of personal
papers for the Archives, we would be required to treat
it similarly.

Presumably some accountant in the Finance Dept. is
depreciating these assets, while simultaneously
creating a fund to offset this depreciation for
replacement purposes (as is done for computers and
other assets normally purchased with capital budget
funds.  Of course, we've no intention of getting rid
of the books or the hypothetical archival purchase I
mentioned above.  We don't even get rid of old
computers because we rarely have enough money to buy
new one.

The Financial Accounting Standards Board has been
revising many of its rules for accounting for
non-profits and government agencies because of the
need to present a more accurate (well,  standardized)
financial picture of  organizations.   Foundations and
federal and state funding agencies require audits
which has increased the likelihood that non-profits
will comply with the rules.  Unorthodox accounting
procedures are a very good way to get a grant proposal
rejected.

When MPM changed its governance structure from a
governmental agency to a private, not-for-profit
organization, the accounting rules under which we
operated changed significantly.  What applied in the
government sector did not necessarily apply in the
private sector.

Judith Campbell Turner
Director, Libray and Archives
Milwaukee Public Museum



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