The Financial Accounting Standards Board (FASB) issued a Proposed Accounting Standards Update, Updating the Definition of Collections, also referred to as the Update. Currently, to be classified as a collection, the asset must be a work of art, a historical treasure, or similar asset and meet all three of the following requirements:
- Be held for public exhibition, education, or research in furtherance of public service rather than for financial gain.
- Be protected, kept unencumbered, cared for, and preserved.
- Be subject to an organizational policy that requires the proceeds of items sold be used to acquire other items for collections.
The Update expands the definition of collections and states that the proceeds from items that are sold are to be limited to direct care of existing collections, as well as acquisitions of other items for collections. The Update is currently open for public comment for 45-days.
For more information on the proposed standard on collections, please contact Mark Robins or our nonprofit specialists at 301.231.6200.