That museum and like collections have cultural, heritage, scientific and educational values is widely appreciated. However, accounting standard setters in Australia and New Zealand have recently advocated that public arts institutions bring their collections to account as assets for financial reporting purposes. There are no similar requirements in the US, European Union (including the UK) and Canada; nor has the International Accounting Standards Board made such a recommendation. From surveys of current accounting practices, it is apparent that, by and large, arts institutions in the English‐speaking world do not report their collections for financial reporting purposes. This paper demonstrates that it is not technically proper to recognise cultural, heritage and scientific collections as assets for financial reporting purposes.

The common expectation of committees established in the wake of the corporate debacles during 1980s in the English-speaking world is that the audit committee device will raise the standards of corporate accountability and governance by improving the quality of financial reporting. That expectation is based on the prevalent belief that by strengthening the independence of auditors and non-executive directors audit committee members will monitor the financial reporting process in an independent manner. Unless accounting practices are reformed so that financial statements can be authenticated by recourse to reliable commercial evidence, audit committees are red herrings. Such reforms are essential if audit committee members are to keep under vigilant appraisal matters pertaining to the financial governance of, and reporting by, firms: the raison d'&tre of their appointment.

The accounting treatment of publiclyowned cultural, heritage and scientific collections has been the subject of international debate, including a number of articles in recent issues of Australian Accounting Review. Here, the debate continues with a rejoinder to a view published in the May 1997 issue of the journal.

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