Part 1: Background

Management of heritage collections in local museums and art galleries.

Local museums and art galleries1 play an important role in our communities as custodians of our heritage. The local museum sector receives significant public funding from ratepayers, central government, and other sources to carry out this role.

We decided to undertake an audit to examine how well local museums manage heritage collections, and fulfil their stewardship obligations, using public funds.

In this Part, we discuss:

  • the local museum sector;
  • the roles and responsibilities of local and central government;
  • funding of local museums;
  • our audit approach;
  • how we treated the valuation of collections; and
  • how we report our findings.

Overview of the local museum sector

New Zealand has a large number of museums and art galleries. They take many forms, have many different purposes, and hold very different collections. According to one estimate, there are as many as 600 museums and art galleries in New Zealand. The 2004 Directory of museums and art galleries published by Museums Aotearoa2 lists some 450 museums and art galleries throughout the country. Most are privately owned, but the largest are funded, operated, or controlled by local authorities.

Museums Aotearoa has estimated that museums employ some 3000 people (and a similar number of volunteers), and attract more than 5 million visits from residents and overseas visitors each year.

The local museum is a well-used and popular attraction. In 2002, a survey conducted through the Cultural Statistics programme, jointly operated by the Ministry for Culture and Heritage and Statistics New Zealand, found that heritage activities, especially visiting museums, were popular with New Zealanders. The survey found that in the previous 12 months, an estimated 48% (1.34 million) of New Zealand adults visited a museum.

The role of local museums

Museums define, conserve, secure, interpret, and exhibit our cultural heritage. They care for several million objects. Objects and art works from New Zealand’s social, cultural, and natural history, and archives of local events and community activities, provide a rich source of information about our past. Museums also contribute to social and economic development, as a part of our heritage, education, leisure, and tourism sectors.

While most museum visitors see, and are only aware of, objects or art works on display, these normally represent only a small proportion of the total holdings of any museum. Research has suggested that, on average, the cost of managing and caring for collections makes up two-thirds of the operating costs of museums. Collections are at the core of any museum. Responsible stewardship of these collections imposes a variety of significant obligations on museums, their staff, and their governing bodies.

Museums also play an important role in promoting scientific inquiry and learning. The collections of a museum are widely used by researchers, including genealogists, historians, students, and scientists. They also provide important heritage learning experiences for local schools, with exhibitions and objects from stored collections adding to the children’s understanding of heritage topics. Many of the museums we visited during our audit were taking part in the Learning Experiences Outside the Classroom (LEOTC) programme funded by the Ministry of Education (see paragraph 1.28).

The changing role of museums

The role of museums in New Zealand is changing, creating debate on how a museum should be defined. The International Council of Museums defines a museum as –

… a non-profit making permanent institution in the service of society and of its development, open to the public, which acquires, conserves, researches, communicates and exhibits, for purposes of study, education and enjoyment, the material evidence of people and their environment.

However, in its April 2005 strategy, Museums Aotearoa notes the evolving role of museums. It describes the contributions that museums make to New Zealand society in the following terms:

  • Museums are places where New Zealanders and visitors learn about and celebrate our identity.
  • Museums are the guardians or “kaitiaki” of collections on behalf of communities.
  • Museums are centres of learning.
  • Museums contribute to regional economic development and tourism.
  • Museums provide civic and community spaces.
  • Museums act as catalysts for creativity.
  • Museums are centres of research and innovation.
  • Museums help to deepen social well-being.
  • Museums strengthen cultural well-being.
  • Museums enhance our understanding of the environment.
  • Museums respond to New Zealand’s international obligations.

Museums Aotearoa’s strategy proposes a revised definition that reflects more clearly museums’ relationships with their communities, and their role in promoting the understanding, interpretation, and exploration of heritage resources and the values that attach to them. The strategy notes the changing role of museums, and puts forward various proposals. These include the need for more effective collaboration and use of resources, support for small museums, greater security of funding, and better use of digital technology.

Government roles and responsibilities

Role of local government

Local government has an important role and significant responsibilities for local museums. The Local Government Act 2002 requires local authorities to promote the cultural well-being of their communities. Many local authorities choose to fund museums as one way towards meeting this requirement. As well as funding a number of small local museums, local government also funds, operates, or controls the largest local museums in the country.

Role of central government

The Government acknowledges that nationally significant collections are housed throughout the country. It also has an interest in communities having viable museums. Given these considerations, the Government has, since 1994, supported local museums through the Ministry for Culture and Heritage in 2 main ways:

  • through the Regional Museums Policy for Capital Construction Projects,3 a programme to support capital developments at certain regional museums; and
  • through an indemnity scheme for touring exhibitions.
  • Role of National Services Te Paerangi

The Museum of New Zealand Te Papa Tongarewa (Te Papa) provides support to the museum sector. Under the Museum of New Zealand Te Papa Tongarewa Act 1992, one function of the Board of Te Papa is –

To co-operate with and assist other New Zealand museums in establishing a national service, and in providing appropriate support to other institutions and organisations holding objects or collections of national importance.

This role is performed by a small group within Te Papa called National Services Te Paerangi.

National Services Te Paerangi works with private and public museums, iwi, and related organisations to build capacity, improve effectiveness, and add value to the services they provide to their communities. It does this through partnerships, project planning, training, education, and consultancy, and by providing practical resources and reports. For example, it organises workshops and seminars on governance, sponsorship and fundraising, marketing, and various aspects of collection care.

In November 2002, National Services Te Paerangi launched the New Zealand Museums Standards Scheme. The scheme enables museums or groups of museums to complete a self-review, and obtain an external review by peers, of their performance against a set of best practice standards. The standards cover 5 areas – governance, management, and planning; care of collections and Māori taonga; public programmes; customer service; and relationships with communities. The scheme has several aims, including:

  • to encourage all museums to achieve accepted standards in managing their collections, exhibitions, public services, visitors, and resources;
  • to build public confidence in museums as effective organisations responsible for the care of heritage collections;
  • to promote good practice in providing visitors and other users with access to the collections through exhibitions, displays, publications, public programmes, and other activities;
  • to provide a focus for strategic planning, training, and development; and
  • to encourage the development of bicultural policy and practice.

National Services Te Paerangi also publishes a number of resource guides and case studies on aspects of museum management, including collection management subjects, such as preventive conservation, copyright, digitisation, collection care, and emergency procedures.

Funding local museums and art galleries

The 3 main sources of funding for local museums are:

  • local authorities, which commonly meet a proportion of operational costs, including staff salaries (which make up the largest component of day-to-day running costs);
  • central government, through a range of agencies; and
  • trusts, bequests, donations, and revenue-raising by museums.

Funding by local authorities

We carried out research to estimate ratepayer funding of museums. Our estimate was consistent with the results of a recent Statistics New Zealand survey, Government Spending on Culture 2000-2004, which showed total local authority spending on museums for 2003-04 of some $50 million.4 Nearly 70% of that amount was committed to funding the museums in the 3 highest spending areas: Otago, Canterbury, and Auckland.5 As well as ongoing operational funding, local authorities contribute funding for capital projects, such as building refurbishment and other improvements to museum facilities.

We asked local authorities about their financial support for museums. Responses to our survey suggest that there are more than 35 museums operated or controlled by local authorities.

Local authorities also support privately owned museums in various ways. This support includes providing annual funding towards operating costs and capital contributions to upgrade facilities. Other ways in which a local authority may support a local museum is by making a local-authority-owned building available for use as a museum.

The financial statements of local authorities do not always identify such support, particularly where funding is small. We did not carry out a detailed analysis, but we did consider the responses by local authorities to our survey, and conducted an in-house analysis. We estimate that between a third and a half of local authorities are likely to be providing support to private museums in one of the above ways.

We do not comment on whether it is appropriate for local authorities to fund museums. Every local authority must strike a balance between many demands for funding, and this task involves setting expenditure priorities.

Funding by central government

For 2005-06, $9.2 million was allocated for funding under the Regional Museums Policy for Capital Construction Projects administered by the Ministry for Culture and Heritage, to support capital developments in regional museums with nationally significant collections.

Local museums also receive funding from the Lottery Grants Board, through its Lottery Environment and Heritage Committee. The Committee’s mission is to foster the conservation, preservation, and promotion of New Zealand’s natural, physical, and cultural heritage, by supporting a number of building restoration, museum development, and environmental projects. Funding is given for a range of cultural heritage purposes, including capital works to upgrade museum buildings, improvements to display and storage facilities to enhance collection care or public access, and the purchase of equipment or materials. The Committee may also meet salary and associated costs for specific collection management projects such as data entry, cataloguing, educational resources, and research. Funding from the Committee for the period July 2004 to June 2005 totalled $6.6 million, with $2.3 million funded under the cultural heritage output.

A number of museums also receive funding to provide educational services for primary and secondary students under the Ministry of Education’s LEOTC programme. The programme aims to provide learning experiences that enrich the curriculum and are not available in the immediate school environment.

Another source of temporary resource funding for museums is the Government’s Task Force Green employment programme. The programme aims to help disadvantaged people gain skills and experience to improve their chances of securing permanent work. Some people have been placed in museums, providing short-term resources for a variety of collection management tasks.

Trusts, bequests, donations, and revenue-raising by museums

Trusts, bequests, and donations are another funding source for local museums.

Some museums also raise their own revenue through admission charges and activities such as shops and cafeterias. Policies on charging for entry, and using facilities for raising revenue, differ markedly from one museum to another.

Our audit approach

We conducted our audit in 2 parts:

  • separate audits of collection management in 13 selected museums and art galleries operated or controlled by local authorities (see paragraphs 1.44-1.46); and
  • an examination of arrangements for local authority funding of private museums and art galleries (see paragraph 1.47).

Our primary aim was to provide independent assurance to the 13 museums that we audited about the management of their collections. The first part of our work involved audits of collections management policies and practices in the selected museums against accepted good practice criteria. After our visit, we provided each museum with a report that set out our findings, confirmed sound practice, and, where necessary, made suggestions for improvement.

We also examined funding arrangements between local authorities and private museums. This part of our work aimed to explore accountability and reporting issues associated with these more arm’s-length relationships, with a particular focus on the museum’s management of its collection.

Our third aim was to communicate the results of our audits to a wider museum audience, and, where appropriate, to raise issues for consideration by the museum sector as a whole, local government, and other stakeholders.

Our audit criteria and advisers

We established our audit criteria by consulting research sources including guidance issued by national associations of museums in Australia, the United Kingdom, and the United States of America, and publications on collection management. In New Zealand, we consulted the National Library, Archives New Zealand, and Te Papa. We drew on the museum standards developed for the New Zealand Museums Standards Scheme, and the National Services Te Paerangi resource guides.

To ensure a consistent approach, we used a standard checklist of good practice expectations. We tested this at a local museum to make sure it was relevant and workable.

The checklist was reviewed by 4 museum sector specialists engaged to guide and advise our audit team. All 4 specialists have experience in museum management, in working with local authorities, and in applying collection management theory and practice. The group consisted of:

  • the director of an art gallery operated by a local authority;
  • the director of a museum operated by a local authority-controlled trust;
  • a senior collections manager from Te Papa; and
  • the director of a university course in museum studies.

We maintained contact with the Ministry for Culture and Heritage during the course of our audit because of the Ministry’s role as the Government’s primary adviser on culture and heritage matters.

Which museums and art galleries did we audit?

For our audit, we selected a mix of large and small institutions, and took account of different governance arrangements, and types of collection. We also chose a mix of museums and art galleries. Principles of good collection management practice apply equally to museums and art galleries. However, they follow some different collection management practices and approaches, which we wanted to examine as part of our audit.6

The local-authority-operated or -controlled museums or art galleries we audited receive about $20 million of ratepayer funding each year.

The museums and art galleries we audited are shown in Figure 1.

Figure 1
Museums and art galleries we audited

Size and type of institution
Name of institution
Small art galleries 2

Eastern Southland Gallery
Whangarei Art Museum

Large art galleries 2 Christchurch Art Gallery
Auckland Art Gallery
Small museums 3 South Canterbury Museum
Whakatane District Museum and Gallery
Gore Historical Museum
Medium museums 4 Rotorua Museum of Art and History
Puke Ariki
Waikato Museum of Art and History
Hawke’s Bay Cultural Trust
Large museums 2 Otago Museum
Canterbury Museum
Total 13

We examined 6 funding arrangements between local authorities and private museums and art galleries (see Figure 2), involving annual expenditure by local authorities of about $810,000.

Figure 2
Funding arrangements we examined between local authorities and private museums or art galleries

Name of local authority Name of private museum or art gallery
South Taranaki District Council South Taranaki District Museum
Waikato District Council Waikato Coalfields Museum
Ashburton District Council Ashburton Museum
Ashburton Art Gallery
Central Hawke’s Bay District Council CHB Settlers Museum
Wairoa District Council Wairoa Museum
Gisborne District Council Tairawhiti Museum

How we carried out the 13 separate museum audits

In each museum, we:

  • assessed its mission and goals;
  • checked whether it had the necessary collection policies;
  • sought evidence of key collection documentation – donor forms, condition reports, and loan documentation;
  • interviewed the director, collections managers, registry staff, security and maintenance staff, and curators about their roles, conservation, inventories, collection records, loans, training, and use of, and access to, the collection;
  • spoke to conservators (where employed in-house) about condition reporting, collection care, training, display, and storage;
  • examined building management systems for environmental control and security, and looked through the display and storage areas to observe climate control and security measures in operation;
  • met or spoke to the Māori liaison person or kaumatua about relationships with the museum, care of taonga, consultation, advice, and liaison; and
  • spoke to a representative of the governing body, whether trust, management board, or local authority (community or corporate services manager), about relationships with the museum, financial and non-financial reporting, and asset management planning (for the museum building and facilities).

In each audit, we tested:

  • the accuracy of a small sample of collection records, by verifying their location and identity against object descriptions in the collection database;
  • the adequacy of loan documentation for selected exhibitions, including condition reporting and loan agreements; and
  • the search capability of the collection database.

For each funding arrangement, we sought evidence of:

  • a funding contract, with reporting requirements covering aspects of collection stewardship (and associated performance measures);
  • periodic reporting to the local authority against those measures; and
  • other aspects of the relationship with the local authority.

We also talked to the directors, staff, and (in some instances) representatives of the governing bodies of private museums about collection management and the museum’s relationship with the local authority.

How we treated the valuation of collections

The approval of Financial Reporting Standard No. 3: Accounting for Property, Plant and Equipment (FRS-3) by the Accounting Standards Review Board in March 2001 reinforced the requirement that all assets – including museum collection assets (collectively known as heritage assets)7 – should be valued and included on the balance sheets of museums and local authorities. Where relevant this will include recognising depreciation on heritage assets.

Not all heritage assets have been recognised on entities’ balance sheets – particularly of museums. In some cases, this has led to us issuing qualified audit opinions.8 This particularly affects stand-alone museums, where heritage assets are pivotal to the entity’s report on its financial performance and position.

Clearly this is not desirable, and we have continued to discuss this matter with the sector. Museum directors have been concerned that a qualified opinion of the museum’s financial statements does not necessarily reflect the state of the collection, management systems, and general care of collections. We have agreed that, while the audit opinion must reflect any non-compliance with the financial reporting requirements, the management of collections is as important an aspect of responsible stewardship as is their valuation. Our decision to undertake this work is an acknowledgement of that shared view.

We did not, as part of our audit of collection management, examine the valuation of collections and other accounting matters related to the way collections are recorded in financial statements. However, it should be noted that museums are responsible for the management of assets of very significant financial worth.

As noted, only some museums have valued their collections. We were therefore unable to establish the total value of collections for the institutions we audited, nor estimate their value within the sector as a whole. However, valuations that have been completed provide clear evidence of the high financial significance of these community assets.

The assessed values of the art gallery collections we audited exceeded $300 million. The holdings of the large regional museums would greatly exceed this figure. High-value collections are not confined to the largest institutions. The collections in 2 of the provincial museums were valued at $27 million and $17 million respectively, and even the small museums we audited held collections with values that ran into the millions of dollars.

How we report our findings

Our report outlines some of the challenges facing museums as they seek to improve their practices and services.

We summarise the key findings from our 13 separate audits, illustrate good practice with practical examples, and provide guidance where we considered this to be helpful.

Where appropriate, we made recommendations directly to the museums we audited through separate feedback reports.

The broader issues and concerns that we identified from our analysis of practices in those museums are referred to in this report as “issues for consideration”.

1: In this report we generally use the term “museum” to refer to both local museums and art galleries, except when discussing an aspect of collection management of particular relevance or application to art galleries alone.

2: Museums Aotearoa is an organisation that represents the interests of the museum sector.

3: Its predecessor was the Policy for Government Assistance Towards Capital Projects at Regional Museums.

4: Statistics New Zealand, Government Spending on Culture 2000-2004, published June 2005, ISBN 0-478-26963-6, page 14.

5: Ibid, page 16.

6: Some museums also hold art works in their collections.

7: FRS-3, paragraph 4.38. Some resources are described as “heritage assets” because of their cultural or historical significance. Heritage assets that meet the definition of property, plant, and equipment are to be accounted for in accordance with this standard.

8: An auditor expresses a qualified audit opinion because of a disagreement between the auditor and the entity, or a limitation on scope.

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