The Institute of Chartered Accountants of India (ICAI) is in talks with the urban development ministry to evolve a mechanism for recording heritage assets,hitherto unaccounted for by local bodies. In days to come,the Qutub Minar or the Red Fort could find a place in the books of accounts of the government. Its valuation could either be a discounted rate of its future revenue streams say from tourism or,if there are no revenue streams,architecture firms could be asked to estimate its value. The ICAI is working on finalising accounting standards for local bodies. Heritage assets form a part of these standards. So far,the accounting regulator has come out with four accounting standards for local bodies. The consensus on recording these assets is being formed on three methods,Committee on Accounting Standard for Local Bodies secretary Keshav Datt told The Indian Express. Datt said though many such assets are recognised and are being preserved by the Archeological Survey of India,many of them are not covered by the agency. Also,many such assets are being used as schools or government offices,which is a waste of national heritage,and a loss in an indirect sense,he said. One method could be using discounted value of future revenues. That is to say,potential cash flows that can be generated from a heritage asset by way of tourism in say 10 years,minus the maintenance cost. In India,Datt said,the amount charged for entry to historical monuments is far less when compared with what is charged in other countries. So,for valuing historical monuments,valuers for such architecture would be used,he said. This is the best method of accounting such heritage assets, he said. The second method can be assigning some reasonable value to these assets,which would again be done with the help of valuers of architecture. Another method to record these historical assets can be to allocate them a token residual value of Re 1 or the cost of acquisition by the government. The accounting regulator has already prepared a concept paper on the issue that has been floated for comments from stakeholders. The institute had,in 2005,constituted a group called the Committee on Accounting Standards for Local Bodies (CASLB) for harmonising and improving accounting and financial reporting among local bodies. Datt said internationally,too,accounting for heritage assets is a very tricky issue. However,the International Accounting Standard Board had in June this year come out with a standard to improve the reporting of assets held by museums and art galleries. The standard mandates significant new disclosure requirements for reporting the content and value of collections.
