Concerns about Corporate Accountingization: should financial reporting of cultural heritage be comparable?

• In Event: Similarities and differences in the measurement of assets between for-profit and not-for-profit organizations under the concept of comparability

Abstract

In this presentation, accounting procedures for the disclosure of cultural properties, such as artworks in museums, in several sets of Japanese accounting standards established for different forms of not-for-profit organisations will be examined, and the relationship between diversity and comparability of accounting standards will be discussed. The financial reporting issue of the cultural heritage of common value to human society is examined in a historical and normative approach, including whether it should be subject to accounting or not (Carnegie et al. 2022). The key idea in this presentation is the corporate/business accountingization (Power and Laughlin 1992).

A wide range of entities establish museums as defined in Japan's Museum Act. They include public interest corporations, religious corporations and local public bodies. Furthermore, in practice, some museums are operated by central government ministries and agencies, incorporated administrative agencies, national university corporations, school corporations, NPOs, private companies and individuals. Japanese accounting standards are defined for each form of organisation. This double diversity exists when considering financial reporting issues relating to heritage and other cultural properties held by museums in Japan. This means that multiple accounting procedures and financial reporting possibilities can be expected for the common cultural heritage of mankind, and the comparability of information cannot be expected.

Around the turn of the century, there has been more activity in setting corporate accounting standards in Japan. As in Europe and the US, the development of accounting standards was accompanied by the creation of a new private sector, Accounting Standards Board Japan, and the Conceptual Framework became a higher-level norm. As if in response to the boom in the development of business accounting standards, it was not until the early 21st century and beyond that accounting standards applicable to not-for-profit organisations were set or significantly revised. In Japan, separate accounting standards have been set for each form of legal entity, which has led to the coexistence of several accounting standards for not-for-profit corporations, resulting in several accounting standards for non-profit organisations, many of which can be seen as influenced by accounting standards for business.

Comparability is one of the fundamental concepts included in the Conceptual Framework for financial reporting, whose primary goal is to be useful for investment decision-making. If ‘comparability' must be essential in the process of setting accounting standards for non-profit and public benefit organisations in Japan, it is nothing more than an approach to corporate accounting standards setting.

Furthermore, in Japan, where multiple sets of accounting standards exist, ‘comparability' is also an issue of another dimension. This may provide a strong basis for promoting the uniformisation of the multiple accounting standards that exist for non-profit and public corporations.If so, is it donors and other funders who benefit from comparability? Or is it some institution that regulates these organisations? We need to observe and analyse.

Author

• Eiiichiro Kudo, Seinan Gakuin University