IPSAS 17 (& IAS 38) Guidance Note 2 Accounting For Library Collections

IPSAS 17 (& IAS 38): GUIDANCE NOTE 2
ACCOUNTING FOR LIBRARY COLLECTIONS

Executive Summary
The recognition and measurement of libraries is a challenging area for United Nations
System organizations. Under UNSAS, generally library materials were expensed upon
acquisition, whereas under IPSAS initial valuation for qualifying library materials should
be recognized at either their cost or fair value. Libraries are likely to include both
physical and intangible aspects which may, if specific criteria are satisfied need to be
reported and classified within Property, Plant and Equipment (PPE) or Intangible assets.
This paper considers only library materials such as books, publications, maps and
electronically available library materials. The library building and physical equipment
found in libraries such as computers, desks and shelving are not dealt with in this paper
but are considered as PPE in previously issued System-wide guidance papers.
The Task Force on Accounting Standards (the Task Force) requested specific guidance
on accounting for libraries. This Guidance Note addresses this request by:
• Proposing that because library materials when taken individually will generally
have a value below the approved Task Force capitalization threshold, they be
grouped and accounted for in the framework of three types of collections –
General, Reference and Heritage.
• Suggesting that the grouping of library materials in the framework of collections
is consistent with the management of libraries in practice and for that reason
close coordination between the library and finance units is essential for the
correct accounting of library materials.
• Providing considerations for library collections that include both PPE and
Intangible items;
• Proposing accounting guidance for library collections in the context of the IPSAS
adoption time-line whereby each type of collection is assigned a specific
accounting treatment according to its characteristics, with both General and
Heritage collections expensed upon acquisition and only Reference collections
capitalized.
• Noting that items in Reference collections, System-wide organizations in practice
may encounter difficulty with the tracking and or cost determination of
individual library books for the purposes of amortization. In such cases, an
average cost method is presented as an alternative since straight line depreciation
may not be feasible.
• Discussing the increasing importance of electronic media (intangible s) in library
collections.
40. IPSAS 17 (& IAS 38) Guidance Note 2 Accounting for Library Collections.doc 07/08/2008
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Table of Contents
This guidance is subordinate to the standard. ................................................................. 3

Guidance Notes............................................................................................................... 3
Guidance Requested on Accounting Treatment of Libraries.......................................... 3
Authoritative Support - Application of IPSAS 3 ............................................................ 3
Other Relevant Paper(s).................................................................................................. 4
Library & Finance Units - Classification and Valuation a Joint Effort .......................... 4
Library Collections - General, Reference & Heritage .................................................... 5
General Collection ...................................................................................................... 6
Reference Collection ................................................................................................... 6
Heritage Collection..................................................................................................... 7
Accounting Treatment for Library Collections - Expense or Capitalize ? ..................... 7
General Collection – Expense..................................................................................... 7
Reference Collection – Capitalize............................................................................... 7
Heritage Collection – Expense ................................................................................... 7
Reliable Cost Measurement - 1 Jan 2009 Achievable ................................................ 8
Transfers between Library Collections....................................................................... 8
Capitalization Threshold - Material as a Group ? ........................................................... 8
Library Collections - PPE or Intangible Assets ? ........................................................... 9
Property Plant and Equipment ................................................................................... 9
Intangible Asset- Electronic Library Media ............................................................... 9
Service Potential - Benefit & Control ......................................................................... 9
First-Time Recognition - Transitional Provisions and Opening Ba lances ................... 10
Property, Plant and Equipment ................................................................................ 10
Intangible Aspect....................................................................................................... 10
The Cost and Fair Value Choice .............................................................................. 10
Financial Statements - PPE and Intangible Asset Categories ....................................... 11
PPE Classification, Useful Lives and Depreciation ................................................. 11
Intangible Classification, Useful Lives and Amortization ........................................ 13
Library Management Information Systems - Impact on Accounting ........................... 13
Increasing Importance of Electronic Library Media - The Future................................ 14
Reference Collections - Periodic Review ..................................................................... 14
APPENDIX A: IFRS & Other Authoritative Support when No Applicable IPSAS .... 15
APPENDIX B: Authoritative Support Accounting Practices Comparison .................. 18
APPENDIX C: Previously Approved Task Force Policies - Relevant to Libraries ..... 19
APPENDIX D: Library Collection Classification and Accounting Treatment ............ 20
APPENDIX E: Transfers between Library Collections ................................................ 21
APPENDIX F: Formula to Calculate Average Value of a Library Collection............. 22
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DRAFT: IPSAS 17: GUIDANCE NOTE 2
ACCOUNTING FOR LIBRARIES
May 2008
This guidance is subordinate to the standard.
1 The final authority on International Public Sector Accounting Standards (IPSAS)
is IPSAS. This guidance aims to meet the requirements of IPSAS, including the
requirements in IPSAS 17 Property, Plant and Equipment and IPSAS 3 Accounting
Policies, Changes in Accounting Estimates and Errors (IPSAS 3) with respect to choice
of accounting policies. If a conflict between the guidance and IPSAS is identified, then
the requirements of IPSAS apply.
Guidance Notes
2 Guidance Notes aim to support organizations as they implement IPSAS
requirements. They may include explanations of what a particular standard means, how a
standard should be understood when applied to United Nations System specific
situations, transactions or events, descriptions of the range of acceptable practices which
may include identification of a best practice where one exists, and guidance on practical
implementation tasks.
Guidance Requested on Accounting Treatment of Libraries
3 The Steering Committee requested further guidance on the accounting treatment
for libraries. 1 This Guidance Note addresses this request by providing:
• a framework for the grouping of library contents into ‘collections’;
• considerations for library collections that include both PPE and Intangible items;
• accounting guidance for library collections in the context of the IPSAS adoption
time-line; and
• discussion on the increasing importance of electronic media (intangibles) in
library collections.
Authoritative Support - Application of IPSAS 3

4 The level of detail found in IPSAS 17 and IAS 38 Intangibles does not address the
specifics and nuances of library accounting. Authoritative support below these standards
has been referred to in order to develop this guidance, applying the framework for
accounting policy development in IPSAS 3. Authoritative support has been sourced from
the jurisdictions of Australia and New Zealand, two jurisdictions whose financial
reporting is closely aligned with IPSAS, and that support is referenced throughout this
Guidance Note. Appendix A provides a detailed discussion on the applicability of that
authoritative support in the context of IPSAS 3 for guidance on accounting for libraries.
1
Request added to System-wide team work plan based on Steering Committee approval in 2007. Topic
request initiated from IAEA. Email correspondence from M. Jeon (IAEA) to System-wide team on
17/10/2008.
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5 Appendix B provides a comparison of the accounting practices prescribed by the
authoritative support.
Other Relevant Paper(s)
6 Previously provided guidance papers relevant to the discussion in this paper are as
follows:
• # 17: Intangible Assets;
• # 19: ‘IPSAS 17 Property, Plant and Equipment Accounting Policies and
Practices: First-time Recognition’;
• # 23: ‘Guidance on First Time Recognition of Property Plant and Equipment’;
• # 38: System-wide Guidance Note ‘IAS 38: Guidance Note 1 Determination of
Intangible Assets Opening Balances for 1st Time Adopters of IPSAS’; and
• # 39: ‘IAS 38: Guidance Note 2 Intangible Assets Accounting for Software and
ERP Systems’.
7 Previously approved Task Force policies relevant to the recognition and
measurement of libraries are provided in Appendix C.
Library & Finance Units - Classification and Valuation a Joint Effort
8 The valuation of library collections is important for many reasons including
accountability, decision making, insurance purposes and, under IPSAS, recognition in the
Statement of Financial Position. Most if not all United Nations System organization are
likely to have libraries. Under UNSAS 2 it is likely that the contents of libraries were
expensed. The focus of this paper is on materials found in libraries such as books, maps,
publications etc. in both tangible and intangible forms. The library building and
equipment used in the library are not dealt with in this paper but are addressed in other
System-wide papers referenced above in the section ‘Other Relevant Papers’.
9 In the year prior to IPSAS adoption, which is expected to be 2009 for the majority
of organizations, United Nations System organizations should ensure procedures are in
place to assign library materials to the three types of classes of library materials
(discussed in paragraphs 12 – 24 of this paper).
10 The classification and valuation of library materials needs to be a collaborative
effort between the finance and library units of an organization (and in some cases
valuation using external professionals may also be required). The Library unit has the
expertise required to understand the classification of library materials and their service
potential to the organization. 3
“….librarians are well informed through an increasing variety of survey data and usage
data of how their collections support teaching, learning and research. This includes the
use, by discipline, of different types of resources for current awareness or for historical
2
UNSAS refers to United Nations System Accounting Standards.
3
United Nations Dag Hammarskjold Library web-site: Mandate - “The library’s primary function is to
enable delegations, Secretariat…..to obtain with the greatest possible speed, convenience and economy, the
library materials and information needed in the execution of their duties.
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research and analysis. This knowledge is invaluable when grappling with the issues of
depreciation and the useful life of assets…4 ”
11 Once library materials are classified, both the library and finance units need to
work together to determine the appropriate valuation of the collections.
Library Collections - General, Reference & Heritage
12 A ‘collection’ is defined as a ‘group’ or ‘aggregate. 5 In practice, the management
of libraries is naturally oriented towards grouping library materials into ‘collections’.
The concept of library collections is important because the type of collection will
determine the valuation and accounting treatment. It is recommended that entities adopt
a pragmatic approach in grouping collections, and try to identify as few collections as
possible. 6
13 Most United Nations System organizations are likely to find that their PPE and
intangible library contents can be grouped into three collections as follows:
Fig 1.0: Classification of Organizational Library Items into Collections
14 The characteristics of each individual library item (whether hardcopy or

electronic) will determine to which collection - General, Reference or Heritage an item is
assigned.
15 It is likely that sub-collections within the three broad collections presented in this
paper may exist and need to be consolidated to the broader collection groupings for
financial reporting purposes. For example, the Reference collection might be comprised
of a sub-collection of maps and charts, a sub-collection of hardcover books and another
4
Financial Accounting and Library Collections: The Bottom Line. Deakin University Library: A Case
Study. Pages 3-4. Deakin University, Anne Horn.
5
Merriam-Webster on-line dictionary: www.merriam-webster.com/dictionary/collection
6
Valuation Guidance for Cultural and Heritage Assets: New Zealand Treasury, November 2002, (The
valuation of Library Collections – A proposal)
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sub-collection of statistical documents. 7 Together they would comprise the broader
Reference collection.
16 The key factors in the determination of library collections are the:
• item’s useful life: is the item used primarily in the 1st year or over many years ?
• way the item is used or made availa ble for use within the library: is the item available
to be borrowed or must it remain within the library ?
• manner in which the item is stored and safeguarded; is the item accessible ‘off the
shelf’ or are special precautions taken with the item ?
• nature of the expenditure on the item to the library: is the item part of a regular
replacement or is it a unique acquisition such as a historic publication ?
• the service potential of the item: How often is the item borrowed or what is the
availability of the item in the collection ?
17 The characteristics of each of the General, Reference and Heritage collection
groupings are described below.
General Collection
18 A General collection is a collection available for the common use of the
organization. It is usually characterized by a large number of low value items which are
used in the day-to-day operations of the library (e.g. technical publications). These items,
in most instances may be borrowed. Due to a pattern of declining use, obsolescence and
of physical deterioration over time, library materials in these collections generally have a
short period of service potential (e.g. the greatest usage is within the first year).
Individual items are continually being updated and replaced. 8
19 Generally periodicals (including subscriptions) would be regarded as part of the
General collection. In some cases however, a different grouping of periodicals might be
more appropriate. The judgment of the library unit should be sought to determine the
appropriate collection should periodicals be more appropriate in a different classification.
Reference Collection
20 Reference collections usually include both general and specialized items. These
items are usually not able to be borrowed, but are available for use, even if archived.
21 Generally, these items have variable uses (research purposes) and have a longer
useful life than common use collections but are not held indefinitely. They are generally
replaced if lost or damaged. 9
22 Items in United Nations System organizations Reference collections should have
a useful life of 3 years or more.
7
United Nations Dag Hammarskjold Library web-site: Collections section – includes UN System
collection, Woodrow Wilson Collection, Oral History collection, External collection, Periodicals collection,
Special collection, Legal collection, Map collection and Statistical collection. These could be grouped to
the three broader categories presented in this paper.
8
Non-Current Asset Policies, Chapter 13: Accounting for Library Collections. Queensland Treasury.
9
Ibid.
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Heritage Collection
23 A Heritage collection is a permanently retained collection which has heritage,
cultural or historic value that is worth preserving indefinitely and to which sufficient
resources are committed to preserve and protect the collection and its service potential.
The collection is generally held for public exhibition, education, or to provide a service to
the community. Heritage collections are not usually available for sale, for redeployment
or for an alternative use. 10
“Special collections consist of a variety of material regarded as rare, valuable,
vulnerable or fragile or of a particular relevance and importance…. The inclusion of an
item in these collections indicates an intention by the Library to preserve the item for an
indefinite time, by placing it in optimal storage conditions and under strictly controlled
access.”11
24 These definitions are consistent with the definition of a heritage asset as specified
in IPSAS 17 12 .
Accounting Treatment for Library Collections - Expense or Capitalize ?
General Collection – Expense
25 General collection items should be expensed on acquisition.
26 Items in a General collection have the highest usage within the first year and a
rapid decline over subsequent years. Given the ir short useful lives and high turnover,
items within a General collection are expensed when acquired. 13
Reference Collection – Capitalize
27 Reference collections, which may include both PPE and intangible items
satisfying the requirements of PPE and/or intangible assets, should be capitalized.
Heritage Collection – Expense
28 United Nations System organizations have an approved policy not to recognize
heritage assets. This Task Force decision will be reconsidered once the IPSASB has
done further work on heritage assets either through an amendment to IPSAS 17 or
through a separate IPSAS standard. 14 15 To date, the IPSASB has not produced further
guidance on the treatment of heritage assets.
10
Ibid.
11
Study. Deakin University, Anne Horn.
12
IPSAS 17, paragraph 9. “Some assets are described as ‘heritage assets’ because of their cultural,
environmental or historical significance.”
13
Non-Current Asset Policies, Chapter 13 (13.4.1): Accounting for Library Collections. Queensland
Treasury.
14
Refer to FBNetwork papers CEB/2007/HLCM/FB/7(the recommendations) and CEB/2007/HLCM/FB/10
(the decisions). CEB System-wide IPSAS paper: Guidance on First Time Recognition of Property, Plant
and Equipment April 2007.
15
The Task Force decision on non-recognition of heritage assets due to limitations in IPSAS 17 is shared
by others. “On the issue of accounting for heritage assets it was felt that IPSAS 17 was not appropriate and
required updating. Particular problems included when to recognize heritage assets on a consistent basis,
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Reliable Cost Measurement - 1 Jan 2009 Achievable
29 United Nations System organizations are likely to find that both the items
included in and the costs of library collections are determinable from 1 Jan 2009. In fact,
most United Nations System organizations are likely to use library information
management systems (the importance of which is discussed later in this document) from
which the contents of library collections are readily determinable.
30 Appendix D provides a quick reference for the grouping of library collections and
the corresponding accounting treatment in the context of the IPSAS adoption time- line
for most United Nations System organizations.
Transfers between Library Collections
31 It is possible that at times items within library collections may need to be moved
from one collection to another (i.e. from the Reference collection to the Heritage
collection). Appendix E provides a chart showing possible transfer combinations and the
appropriate accounting treatment for each.
Capitalization Threshold - Material as a Group ?
32 United Nations System organizations will find that the vast majority of individual
items within their library collections have a value of less than the approved Task Force
capitalization threshold. 16 However, 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. 17
33 IFAC Study 14 discusses in paragraphs 6.48 and 6.49 the 'Capitalization of Assets
below the reporting threshold as follows:
"Some assets may have a lower value, per unit, than the capitalization threshold.
However, such assets may be material as a group. In this case, the assets are generally
recorded as a single group asset, with one combined value. Examples where the
recognition of assets as a single group may be appropriate include:
• computer networks;
• furniture and fittings;
• certain types of equipment; and
• professional libraries.
Despite the fact that such items may be recorded as a single asset in the financial systems,
an entity is still able to monitor or control the use and maintenance of these assets via a
subsidiary system.”
how to value them when no market exists, and what additional disclosures might be appropriate.”
Modernising Accounting in the Public Sector: EC/FEE Conference 28 September 2006. Workshop A:
Accounting Principles – Issues and challenges in the transposition of IPSAS into national and international
public sector accounting.
16
(the decisions). Capitalization Threshold: Up to a maximum of US $5,000 (or equivalent in currency other
than United States dollars).
17
Valuation Guidance for Cultural and Heritage Assets: New Zealand Treasury, November 2002
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34 United Nations System organizations should value library items as part of
organizational collections.
Library Collections - PPE or Intangible Assets ?
35 United Nations System organizations are likely to find that their libraries include
both PPE items such as hardcopy books and periodicals and intangible components such
as electronically available books and other materials.
Property Plant and Equipment
36 PPE items found in a library may have been internally developed or acquired
through donation or purchase.
37 The cost of a PPE component of a library is recognized as a PPE asset only if both
of the following are demonstrated 18 :
• It is probable that future economic benefits or service potential associated with the item
will flow to the entity; and
• The cost or fair value of the item can be measured reliably .
Intangible Asset- Electronic Library Media
38 Intangible items in libraries such as online publications and audio recordings
available through electronic media must satisfy both the definition of an intangible asset
and the criteria for recognition of an intangible asset which like PPE include the notion of
future economic benefit or service potential and reliably measurable cost. If either of
these criteria is not met, the item must be expensed. 19
Electronic Library Media - Donated, Internally Generated, Licensed or Purchased ?
39 United Nations System organizations are likely to find that increasingly the
proportion of their library collections are or will become electronic in nature as access to
online databases and other non-print products such as CD-ROMS may relieve the need
to maintain hardcopy versions of every publication. 20
40 The materials available on electronic media in United Nations System libraries
are likely to be internally generated, donated, licensed and/or purchased.
41 The appropriate accounting treatment for each of these is provided in the January
2008 issued System- wide Guidance Note “IAS 38: Guidance Note 1 Determination of
Intangible Assets Opening Balances for 1st Time Adopters of IPSAS”.
Service Potential - Benefit & Control
42 United Nations System organizations libraries generally speaking exist not to
provide future economic benefits to the organization gained through charging user fees
for access to library materials but rather are provided without charge to users.
43 The service potential of library items is a key in determining whether library
collections qualify as assets.
18
IPSAS 17: Property, Plant and Equipment, paragraph 14.
19
IAS 38, paragraph 68.
20
United Nations Dag Hammarskjold Library web-site: Retention and weeding of the library’s collections.
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44 Service potential can be demonstrated in a number of ways including the asset’s
utilization or its effectiveness in supporting organizational activities. 21
45 Service potential indicators for library collections include how many times items
within the collection are borrowed or used or the length of time an item is available for
usage 22 .
46 Further to measuring service potential, United Nations System Organizations
must have control over the service potential of the library collection to the extent that
each organization is able to enjoy the benefits and deny or regulate the access of others to
the benefits. In addition, the transaction or other event that gives rise to the entity’s
control must have occurred.
First-Time Recognition - Transitional Provisions and Opening Balances
47 As discussed previously in this paper, items acquired for both General and
Heritage collections are expensed in the year of acquisition (first year) and thus not a
concern for organizations for capitalization purposes.
Property, Plant and Equipment
48 The Task Force previously agreed that on first-time recognition when adopting
IPSAS organizations recognize their property plant and equipment at either cost or fair
value 23 . On first-time adoption, United Nations System organizations should account for
Reference collections as qualifying capitalizable PPE using either cost at acquisition date
or, if that is not determinable, then fair value as acquisition cost or fair value at time of
first-time adoption24 .
Intangible Aspect
49 In the absence of an IPSAS, IFRS 1 First-time Adoption of International Financial
Reporting Standards (IFRS 1) provides relevant guidance on preparing opening balances
for intangible assets. IFRS 1 does not provide a transitional period for the progressive
recognition of assets.
The Cost and Fair Value Choice
50 Although each System- wide organization is able to choose whether they use cost
or fair value on first-time recognition, prior to 2009, it is unlikely United Nations System
organizations will have the necessary cost information to reliably measure acquisition
21
Government of Victoria, Australia, Asset Management Series: Principles Policies and Practices.
22
Non Current Asset Policies - Chapter 13: Accounting for Library Collections. Queensland Treasury.
23
United Nations Task Force on Accounting Standards approved policy at April 2007 Task Force.
Reference, Paper # 19 ‘IPSAS 17 Property, Plant & Equipment Accounting Policies and Practices: First-
Time Recognition’.
24
IPSAS 3 requires an entity to retrospectively apply accounting policies unless it is impractical to do so.
Therefore, when an entity initially recognizes an item at cost in accordance with the standard, it shall also
recognize any accumulated amortization and any accumulated losses that relate to that item, as it has
always applied those accounting policies.
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cost for individual library materials. It is foreseeable that the use of fair value will be the
most pragmatic approach for first-time recognition25 .
51 From 1 January 2009, United Nations System organizations however are likely to
find that Reference library collections will satisfy the requirements to be recognized as
assets. This reasoning is based on the availability of reliable cost information to
determine an appropriate value for capitalization and on the service potential of the
collections. A review of authoritative support in New Zealand and Australia shows that
for those jurisdictions libraries are initially valued using fair value 26 .
52 As a result, most United Nations System organizations should be able to
recognize Reference library collections upon first-time adoption of IPSAS and not have
to invoke the five year transitional provision available in IPSAS 17. However, there
maybe timing issues factors such as improvements to automated library systems and ERP
systems which would necessitate the use of the transitional provision primarily because
comprehensive information on the existence and valuation of library materials cannot be
compiled.
53 For the same reasons of cost determination and service potential provided for PPE
library components such as hardcopy books, the absence of a transitional provision for
intangible assets such as electronic library media should not preclude United Nations
System organizations from recognizing intangible library components in Reference
collections from 1 January 2009.
Financial Statements - PPE and Intangible Asset Categories
54 The Task Force approved recommended accounting practices for asset
classification is for United Nations System organizations to use six PPE classes and six
Intangible asset classes when preparing IPSAS compliant financial statements. 27
55 No asset classification is required for General and Heritage collections. They are
not capitalized and are not reported as assets on the financial statements.
56 Reference collections given their long useful lives should be shown on the
Statement of Financial Position as non-current assets.
PPE Classification, Useful Lives and Depreciation

57 Research for this paper has shown that in practice the accounting and
classification of library collections on the Statement of Financial Position is not
consistent. In some cases library materials are capitalized and shown as PPE or as a
25
Active markets for materials found in United Nations System libraries maybe limited. Indexes such as
the Bowker Annual Library and Book Trade Almanac may prove useful in determining fair value in some
cases.
26
Refer to Appendix B in this guidance note.
27
Refer FBNetwork papers CEB/2007/HLCM/FB/7 (the recommendations) and CEB/2007/HLCM/FB/10
(the decisions). The six approved PPE classes are: Communication including IT Equipment, Vehicles,
Furniture and Fixtures, Leasehold Improvements, Buildings, and Land. The six approved (RAP 07/1/3)
classes of intangible assets are Software acquired internally, Software internally developed, Intangible
Assets under development, Copyrights, and Other Intangible assets.
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separate asset classification within PPE while in others cases they are expensed and not
recognized at all. 28
58 Most United Nations System organizations are likely to find that the size of their
Reference library collections do not warrant a separate asset classification. However,
since library collections do not easily fit into the six approved Task Force PPE classes.
The two assets classes that are most appropriate for Reference library collections are
‘Furniture and Fixtures’ and ‘Communications and IT Equipment.’ Of these two, it is
suggested that ‘Communications and IT Equipment’ is more appropriate, because of the
information providing and communicative purpose of library materials. The Task Force
approved useful lives of between 3 to 7 years 29 for assets within this classification is at
the lower end but not inconsistent with the useful lives of library materials in practice 30 .
59 Should United Nations organizations deem their Reference Library Collection to
be significantly material, then a separate PPE asset class called “Reference Library
Collection” should be considered.
60 The recommended accounting practice also states that:
Further classes should be added when further significant material groups of assets exist,
for example, infrastructure assets, work-in-progress, specialized vehicles, machinery. An
organization may need to amalgamate recommended classes, if a class is not material31 .
61 IPSAS 17 does not provide the scope to exempt PPE from being depreciated. The
only exception is specifically for heritage assets that are not capitalized and therefore not
depreciated. A review of authoritative support from Australia and New Zealand indicates
that library collections that are capitalized are depreciated, usually using the straight line
depreciation method 32 . System-wide organizations therefore should depreciate their
Reference library collections using the Task Force approved straight line basis. 33
28
UK Universities sector, Statement of Recommended Practice (SORP) – Accounting for further and
higher education 2007 does not explicitly address treatment of libraries. However, email correspondence
with CIPFA indicates that UK public sector entities are most likely expensing their library collections and a
review of entities likely to have significant investments in libraries is highly suggestive that they are not
recognized. Conversely the National Library of New Zealand June 2007 Annual report shows library
collections separately on the Statement of Financial Position as non-current assets and depreciated over
their useful lives. The Library Board of Queensland includes library collections as part of PPE on the
Statement of Financial Position.
29
Refer FBNetwork papers CEB/2007/HLCM/FB/7 (the recommendations) and CEB/2007/HLCM/FB/10
(the decisions). Refer IPSAS paper # 13 ‘IPSAS 17 Property, Plant and Equipment Accounting Policies
and Practices’ where PPE Class Communication and IT Equipment has a useful life range of between 3 to
7 years and PPE Class Furniture and Fixtures has a useful life range of between 5 to 12 years.
30
Research of entities who are depreciating library collections show that the useful lives range for example
from: Auckland City Council 2007 – library collection 3 to 12 years; National Library of New Zealand
Annual Report June 2007 – library collection 5 to 50 years; Sydney City Council Statutory Returns
2006/07 – library collection 10 years.
31
(the decisions).
32
Refer to Appendix B in this guidance note.
33
(the decisions).
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Intangible Classification, Useful Lives and Amortization
62 For those portions of Reference library collections that qualify as intangible
assets, the Intangible asset classes that are likely to be applicable are ‘Licenses and
Rights’ and ‘Other Intangibles’.
63 The useful life of items within the ‘Licenses and Rights’ classification determined
as the shorter of the license or rights period and 2 to 6 years or in the ‘Other Intangibles’
classification a useful life depending on the type of item. 34
64 Similar to PPE the scope to not amortize intangible assets is not available in IAS
38. System-wide organizations should amortize the intangible aspects of their Reference
collections according to their Intangible asset classification.
Library Management Information Systems - Impact on Accounting

65 It is likely that most United Nations System organizations use automated library
management software and systems. These systems should be appropriately accounted for
and classified depending on whether they were purchased or internally developed. 35
66 Essential to accounting for library collections is a library management
information system that accurately tracks the classification of library items, and the
additions and removal of individual books and periodicals within each collection. This
requirement is usually achievable through electronic coding (i.e. bar code) placed on each
individual library item.
67 United Nations System organizations should take at a minimum immediate action
to ensure that library items are classified within their library management systems and
that the information required to account for library collections is available from the
library ma nagement system for inclusion in the organization’s financial accounts either
manually or through an interface to the organization’s enterprise resource planning (ERP)
system.
68 Should individual item cost information (i.e. cost of an individual book) be
captured in an organization’s library management system, accounting for transfers,
additions, removals etc of the individual item from collections is based on the item’s cost
and thus relatively straight forward.
69 However, it maybe the case that this detailed type of cost information for reasons
including system limitations is not captured on an item by item basis and would not be
realistic to track manually. 36 In such cases, the use of a rolling average cost might be the
only feasible way to account for Reference collections over time and still reflect the
materiality of reference collections on the Statement of Financial Position. Appendix F
provides an average cost formula that could be used for this purpose.
34
Task Force approved RAP 07/1/4 useful lives. Reference IPSAS paper # 17: IAS 38 Intangible Assets.
35
Refer to IPSAS System-wide paper “IAS 38: Guidance Note 2 Intangible Assets Accounting for Software
and ERP Systems” for further guidance.
36
In discussions with various United Nations System-wide organizations it was determined that tracking
and cost determination of individual library items may not be feasible at this time given current systems.
Page 13 of 22
Increasing Importance of Electronic Libra ry Media - The Future
70 United Nations System organizations are likely to find that electronic library
media will over time become increasingly larger components of library collections and in
some cases replace print materials.
“The replacement of print materials with electronic versions providing web access is the
prevailing strategic direction evident across the sector.”37
“The increasing move to electronic journals and electronic books by scholarly publishers,
coupled with users’ preferences for online access, is leading the library to question the
long term value of print items.”38
71 Another significant factor that may further expedite the move to electronic media
is the increasing price of periodicals and books.
“Many libraries are dealing with periodical price increases by subscribing, individually or
consortially, to databases that provide on-demand access to periodical literature as an
alternative to paper subscriptions.”39
72 The significance for United Nations System organizations is the possibility that
library items in print format that are originally capitalized, may in increasing numbers be
deemed disposable from Reference collections in the future.
73 The financial effect of this would be to increase the level of expenditure shown on
an organization’s financial statements in a write-down year instead of had the print items
continued to be capitalized over their originally stated useful lives and service potential.
Reference Collections - Periodic Review

74 The determining factor for inclusion or removal in a collection is usually
continued service potential.
75 United Nations System organizations should review the contents of their
Reference Library collections periodically. Coordination with the library unit is
suggested to ensure the library’s ‘weeding and discard’ schedules are understood and
compatible with financial reporting requirements.
37
Study. Page 4. Deakin University, Anne Horn.
38
Ibid.
39
Pricing Trends for Public Library Print Materials. November 2004 (ED3/110.10/No. 212). Colorado
State Library, Colorado Department of Education. Library and Information Science Program, College of
Education, University of Denver.
Page 14 of 22
APPENDIX A: IFRS & Other Authoritative Support when No Applicable IPSAS
A1 Where there is no applicable IPSAS, IPSAS 3 requires that management

determine the applicable accounting policy as follows:
Paragraph 12: In the absence of an International Public Sector Accounting Standard
that specifically applied to a transaction, other event or condition, management shall
use its judgment in developing and applying an accounting policy that results in
information that is:
a) relevant to the decision-making needs of users; and
b) reliable, in that the financial statements:
I. represent faithfully the financial position, financial performance and cash flows of
the entity;
II. reflect the economic substance of transactions, other events and conditions and not
merely the legal form;
III. are neutral, i.e. free from bias;
IV. are prudent; and
V. are complete in all material aspects.
Paragraph 13: Paragraph 12 requires the development of accounting policies to
ensure that the financial statements provide information that meets a number of
qualitative characteristics. Appendix B in IPSAS 1 summarizes the qualitative
characteristics of financial reporting.
Paragraph 14: In making the judgment, described in paragraph 12, management shall
refer to, and consider the applicability of, the following sources in descending order:
(a) the requirements and guidance in International Public Sector Accounting Standards
dealing with similar and related issues; and
(b) the definitions, recognition and measurement criteria for assets, liabilities, revenue
and expenses described in other International Public Sector Accounting Standards.
Paragraph 15: In making the judgment described in paragraph 12, management may
also consider the most recent pronouncements of other standard-setting bodies and
accepted public or private sector practices to the extent, but only to the extent, that
these do not conflict with the sources in paragraph 14. For example, pronouncements
of the International Accounting Standards Board (IASB), including the Framework for
the Preparation and Presentation of Financial Statements, International Financial
Reporting Standards and Interpretations issued by the IASB’s International Financial
Reporting Interpretations Committee (IFRIC) or the former Standing Interpretations
Committee (SIC).
A2 IFRS standards are positioned as the primary candidates for application, when no
IPSAS standard exists for a topic for three reasons. First, IFRS and IPSAS have the same
origins (IFRS) and are each internally consistent. Therefore, they usually treat similar
Page 15 of 22
and related issues in the same way within and between the two sets of standards. Second,
IPSAS applies concepts largely similar to those that under-pin IFRS. The result of these
similarities is that IFRS standards are very likely to meet the requirements above. Third,
IFRS is the only set of standards specifically mentioned in paragraph 15, which suggests
that IFRS are acceptable replacement standards, so long as they meet the requirements of
(a) and (b).
A3 International organizations that have adopted IPSAS have adopted the relevant
IFRS when IPSAS exists. The International Federation of Accountants, the OECD,
NATO and the European Commission adopt the relevant IFRS when no IPSAS exists.
A4 Accounting for libraries is somewhat of a grey area when applying relevant
standards such as IPSAS 17 and IAS 38. The level of detail found in those standards
does not address the specifics and nuances of library accounting. Authoritative support
below these standards is therefore used to support guidance provided. Authoritative
support has been sourced from Australia and New Zealand and they are referenced
throughout this guidance note. Specifically, the authoritative support used is from a
national government, the Government of New Zealand National Treasury40 (NZNT) and
two state governments, the Queensland Government Treasury41 (QGT) and the
Government of Victoria Treasury and Finance 42 (GVTF).
A5 The use of authoritative support from these jurisdictions is within the parameters
of paragraphs 14 and 15 of IPSAS 3. This authoritative support has been developed in
two jurisdictions that apply the same definitions, recognition and measurement criteria
for financial elements as those in IPSAS and the applicable financial reporting standards
in the two jurisdictions are very similar to IPSAS. They are an example of ‘accepted
public sector practices’ as described in paragraph 15, which are acceptable so long as
they do not conflict with the sources in paragraph 14, which they do not. Their
applicability as authority also comes from the fact that they are produced by government
organizations responsible for developing prescriptive policies that are applied to and used
by public sector entities such as national and state libraries. The policies are made
publicly available, the public sector entities applying these policies make their financial
statements publicly available and those statements are audited by independent auditors.
A6 It is a matter of professional judgment in the circumstances of the organization as
to which other sources of authoritative support should be considered, and how conflicts
between other sources of authoritative support should be resolved in determining
accepted accounting practice. For the purposes of this guidance note, no level of this
available government authority is considered to be higher in the application hierarchy
than another. However, as shown in Appendix B, although the sources of authoritative
support all agree to recognize certain aspects of libraries for capitalization purposes, they
40
Information sourced from New Zealand Treasury Instructions 2007 and New Zealand Treasury
Valuation Guidance for Cultural and Heritage Assets.
41
Information sourced from Queensland Government Treasury – Non Current Asset Policies for the
Queensland Public Sector (Revised February 2008).
42
Information sourced from State Government of Victoria, Department of Treasury & Finance, FRD
103C- Non-Current Physical Assets.
Page 16 of 22
are not consistent in the specifics of how to do that. There are differences in the number
of collections used and which types of collections will be capitalized or expensed. For
example, the QGT groups’ library items into three collections, the NZNT into two and
the GVTF does not make reference to collections. The QGT prescribes capitalizing only
Reference collections and not Gene ral collections, whereas the NZNT does capitalize
items that would be considered ‘general’ as part of their Non-heritage collection
grouping. Other differences include the initial valuation of libraries where the QGT and
the NZNT prescribe fair value for initial valuation and the GVTF prescribes cost.
A7 In the case of the apparent conflicts between these different sources, the approach
taken by the QGT to recognize three types of collections and capitalize only Reference
collections was deemed the clearest and most relevant to United Nations System
organizations, given the use of many types of library collections within the system,
previously approved Task Force polices with regards to choice of cost or fair value for
first time recognition, PPE classifications and useful lives and the non-recognition of
heritage assets.
Page 17 of 22
APPENDIX B: Authoritative Support Accounting Practices Comparison
Suggested Treatment New Zealand Queensland Victoria

Treasury 43 Treasury 44 Treasury 45
Recognize Libraries YES YES YES

(some or all of the
collection)
Divide into Collections YES YES Not Specified
Types of Collections General and Heritage General, Reference Not Specified

and Heritage
Capitalized Collections General only Reference only YES
Initial Recognition Fair Value Fair Value Cost

Valuation
Depreciation Taken YES YES YES
Subsequent Measurement Fair Value Fair Value Fair Value

(Depreciated (Average (less accumulated
Replacement Cost) Replacement Cost) depreciation and
impairment)
Fig 2.0: Authoritative Support Accounting Practices Comparison
43
Information sourced from New Zealand Treasury Instructions 2007 and New Zealand Treasury
Valuation Guidance for Cultural and Heritage Assets.
44
Information sourced from Queensland Government Treasury – Non Current Asset Polic ies for the
Queensland Public Sector (Revised February 2008).
45
Information sourced from State Government of Victoria, Department of Treasury & Finance, FRD
103C- Non-Current Physical Assets.
Page 18 of 22
APPENDIX C: Previously Approved Task Force Policies - Relevant to Libraries
B1 The following previously approved Task Force policies are relevant to accounting
for library collections 46 :
• First-time recognition of PPE: Organizations recognize their property plant and

equipment at either cost or fair value.47
• Recognition of heritage assets: Do not recognize heritage assets, but reconsider the
policy when the IPSASB has done further work on requirements for reporting heritage
assets.48
• Capitalization Threshold: Up to a maximum of US $5,000 (or equivalent in currency
other than United States dollars). After two years, each organization reviews and adjusts
as necessary.49
• Use of Transition Periods for PPE: Organizations use transition periods only to the extent
necessary to ease the difficulty of compliance with that particular IPSAS and thereby
make compliance practically speaking more achievable.50
• PPE & Intangible Asset Classification and Useful lives – Six classes approved for each
with associated useful lives ranges. Discussed in ‘Financial Statements – PPE and
Intangible Asset Categories’ section of this paper.51
46
Refer to FBNetwork papers CEB/2007/HLCM/FB/7 (the recommendations) and
CEB/2007/HLCM/FB/10 (the decisions).
47
Refer to IPSAS paper # 19: ‘IPSAS 17 Property, Plant & Equipment Accounting Policies and Practices:
First Time Recognition’.
48
Refer to IPSAS paper # 13; ‘IPSAS 17 Property, Plant and Equipment Accounting Policies and
Practices’. (Note that Task Force policy continues in force, and will be reconsidered once the IPSASB has
done further work on heritage assets either through an amendment to IPSAS 17 or through a separate
standard).
49
Refer to IPSAS paper # 13; ‘IPSAS 17 Property, Plant and Equipment Accounting Policies and
Practices’.
50
Refer to IPSAS papers # 18 ‘Transitional Provisions’ and # 19 ‘IPSAS 17 Property, Plant & Equipment
Accounting Policies and Practices: First Time Recognition’.
51
Refer to IPSAS paper # 13, ‘IPSAS 17 Property, Plant and Equipment Accounting Policies and
Practices’.
Page 19 of 22
APPENDIX D: Library Collection Classification and Accounting Treatment
Library Collection Collection Accounting Treatment
Classification52 Characteristics
1. General Collection • Large number of individual
items
• Low dollar value
• Items can be borrowed and used
a). Pre - 2009 outside of the library a). Expense
• Frequently used
• Greatest usage and benefit of
b). From Jan 1, 2009 b). Expense
item occurs in 1st year.
2. Reference Collection • Includes general and

specialized items
• Items are permitted for loan/use
a). Pre - 2009 outside of the library a). Expense
• Long useful lives (3 + yrs)
b). Capitalize: If total value
• Items generally replaced over
b). From Jan 1, 2009 time of collection is >/ $5000.00
in the reporting currency.
3. Heritage Collection • Permanently retained a & b). Expense 53

• Heritage, historic or cultural
a). Pre - 2009 significance
b). From Jan 1, 2009
Intangible - Electronic Media • Electronic media can be a). Expense

found in any of the 3
a). Pre – 2009 b). Capitalize – if
collection classifications.
• classified as part of
Electronic media can be
b). From Jan 1, 2009 purchased, internallyReference collection and
as is identifiable, entity
developed, donated and/or
has control, cost can be
obtained through a licens ing
agreement. measured reliably and
future economic benefit
or service potential can
be demonstrated.
Fig 3.0: Quick Reference showing Library Collection Classifications and
Accounting Treatment
52
2009 is used as a benchmark year because it is generally considered to be the year prior to IPSAS
adoption by the majority of United Nations System organizations.
53
(the decisions).
Page 20 of 22
APPENDIX E: Transfers between Library Collections 54
Old Collection New Collection Accounting Treatment

Classification Classification
Common use Reference Transfer the item to the new class and
apply the cost or average value as part
of the transfer process.
Common use Heritage Transfer the item to the new class. No

accounting entry required.
Reference Common use Remove the item from the collection,

effectively expensing the item.
Reference Heritage Remove the item from the collection

and transfer to the new class, effectively
expensing the item.
Heritage Common use Transfer item to new class. No

accounting entry required.
Heritage Reference Transfer item to the new class and apply

cost or average value.
Fig 4.0: Quick Reference showing Accounting Treatment of Transfers between

Collections
54
Adapted for IPSAS requirements and United Nations System organizations from the chart (13.6) found
in Non-Current Asset Policies, Chapter 13: Accounting for Library Collections. Queensland Treasury.
Page 21 of 22
APPENDIX F: Formula to Ca lculate Average Value of a Library Collection55
Transaction Add
Item or
Subtract ?
Opening number of items held at 1 January Beginning amount
Number of purchases & other acquisitions during financial Add (+)
year
Number of transfers- in from other collections Add (+)
Number of disposals and write-offs during financial year Subtract (-)
Number of transfers-out to other collections Subtract (-)
Closing number of items held at 31 December A = Total items
Average cost over period applied B = Average Cost per item

(= Total value of purchases/Number of items purchased)
Total Average Replacement Cost at 31 December A x B = Average Cost Collection
Fig 5.0: Average Cost Formula for each Library Collection
Note(s):
• Where multiple copies of an item are held at the same library location only one
copy per location is to be included in the calculation.
• Formula can be applied to each library collection classification.
• Formula can be used for reporting periods as required (i.e. ad-hoc, interim, year-
end etc).
55
Adapted from Appendix 13.1 of Non-Current Asset Policies, Chapter 13: Accounting for Library
Collections. Queensland Treasury.
Page 22 of 22

IPSAS 17 (& IAS 38) Guidance Note 2 Accounting For Library Collections

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IPSAS 17 (& IAS 38) Guidance Note 2 Accounting For Library Collections

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IPSAS 17 (& IAS 38): GUIDANCE NOTE 2

ACCOUNTING FOR LIBRARY COLLECTIONS

This guidance is subordinate to the standard. ................................................................. 3

Authoritative Support - Application of IPSAS 3

Fig 1.0: Classification of Organizational Library Items into Collections

14 The characteristics of each individual library item (whether hardcopy or

PPE Classification, Useful Lives and Depreciation

Library Management Information Systems - Impact on Accounting

Reference Collections - Periodic Review

A1 Where there is no applicable IPSAS, IPSAS 3 requires that management

Suggested Treatment New Zealand Queensland Victoria

Recognize Libraries YES YES YES

Divide into Collections YES YES Not Specified

Types of Collections General and Heritage General, Reference Not Specified

Capitalized Collections General only Reference only YES

Initial Recognition Fair Value Fair Value Cost

Depreciation Taken YES YES YES

Subsequent Measurement Fair Value Fair Value Fair Value

Fig 2.0: Authoritative Support Accounting Practices Comparison

• First-time recognition of PPE: Organizations recognize their property plant and

2. Reference Collection • Includes general and

3. Heritage Collection • Permanently retained a & b). Expense 53

Intangible - Electronic Media • Electronic media can be a). Expense

Old Collection New Collection Accounting Treatment

Common use Heritage Transfer the item to the new class. No

Reference Common use Remove the item from the collection,

Reference Heritage Remove the item from the collection

Heritage Common use Transfer item to new class. No

Heritage Reference Transfer item to the new class and apply

Fig 4.0: Quick Reference showing Accounting Treatment of Transfers between

Closing number of items held at 31 December A = Total items

Average cost over period applied B = Average Cost per item

Total Average Replacement Cost at 31 December A x B = Average Cost Collection

Fig 5.0: Average Cost Formula for each Library Collection

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