In March 2019, the FASB issued an Accounting Standards Update (ASU) changing the definition of a collection to allow proceeds of a sale of a collection item to be used for the direct care of existing collection items. However, ASU 2019-03 did not address the definition of direct care,” leaving it to industry to provide guidance. This video blog explores a recent Q&A issued by the AICPA that provides additional guidance on what does it mean to use funds for the direct care by providing examples of what would (and would not) qualify. While not authoritative, the TQA does provide relevant guidance to be used in considering whether an expense qualifies as direct care. 

This guidance can be useful to include for art collections found in museums, not-for-profits that have art collections – even zoos that consider their animals to be collections. 

When an entity determines which costs are considered direct care of collection items, important characteristics to consider include, but are not limited to, whether those costs: 

  • Enhance the life, usefulness, or quality of an entity’s collection 
  • Provide a benefit to the collections (and not the entity as a whole or other areas of the entity beyond the collections) 
  • Exclude expenditures that are regular and ongoing in nature (such as expenditures for routine maintenance of the collection) 

What questions do you have? Send your questions to 

SCACPA is excited to partner with Galasso Learning Solutions and the Genuine Learning Blog for real-time A&A updates and answers for SCACPA members. With over 15 years of experience in the accounting profession, Melisa Galasso designs and facilitates courses in advanced technical accounting and auditing topics, including not-for-profit and governmental accounting. She closely monitors regulatory bodies for changes in auditing and accounting guidance and serves as a subject matter expert in implementing the updated guidance. 

Look for Melisa to be a speaker on audit topics at the SCACPA’s 2019 Spring Splash and Fall Fest as well as many seminars and rebroadcasts.