White Papers Offer Guidance on Gift Card Liability & Reconciliation

Gift cards are a multimillion-dollar business, and independent booksellers participating in ABA's Gift Card program have sold more than $1.1 million gift cards since the program's inception in September 2003. ABA Gift Cards are consumer-friendly and do not expire or lose value so, as with any gift card program, it is important that booksellers understand how to manage the liability from unredeemed cards and know how to reconcile their gift card program with Givex.

With the help of former Givex CFO and current gift card industry consultant Maurizio Divito, the American Booksellers Association has developed two gift card accounting white papers. ABA is encouraging all gift card participants to download and review the papers in detail. The documents are posted in the bookseller-only section of BookWeb.org, along with the program manuals in the ABA Gift Card section of the site.

The first paper covers accounting for gift cards and liability reconciliation. It is meant to provide a systematic approach for reconciling the gift card liability generated as a result of operating a gift card program.

The purpose of the second document is to discuss the accounting and related circumstances for recognizing unused gift card balances or "breakage." The document is meant to provide information to those operating and accounting for gift card programs in determining their financial statement accounting policies.

It is advised that all booksellers review the white papers with an accountant when considering how these issues may affect their business.

Questions about the documents or the ABA Gift Card program should be directed to the program's manager, Jill Perlstein.