Valuation Of Heritage Assets: Implications For South Africa

There is a growing recognition of the value, importance and impact of assets held for cultural, environmental or historical significance (heritage assets) on the financial statements of organizations and that the disclosure for financial reporting requires valuation information on the heritage assets. Currently in the absence of local standards, valuation practitioners (Valuers) in South Africa apply variety of methods and differing standards to determine the value of heritage assets. This opens a potential for a risk of an incomplete picture of the financial standing of an organisation. The purposes of this research is to argue that the current approaches and methods used in South Africa to value heritage assets are inherently flawed as a result subjectively and inconsistently apply the theory of value. This research comparatively examines methods used in the valuation of heritage assets conducted in terms of the guidelines by the Royal Institute of Chartered Surveyors (RICS), Generally Recognized Accounting Practice - Heritage Assets (GRAP 103), International Valuation Standards - Valuation of Historic Property (IVS) and the International Financial Reporting Standards (IFRS) for the valuation of two cases of heritage assets. This is in order to assess reasonability of the methods and assumptions used in determining the asset values. By researching the methods used for the valuation of heritage assets, emerging ideas became evident and the findings indicate certain specific characteristics impact directly on the determination of value and such characteristics can evidently be used in South Africa for the development of valuation standards for heritage asset.