A new set of international valuation standards comes into force from July 2017 with the aim of creating greater consistency, transparency, and confidence in valuations, which are key to investment decisions as well as financial reporting.
Despite the importance of the valuations to the financial system there has historically been wide differences in practice between countries, industries, and professionals on the best approaches and methodologies to use. Such differences are the cause of many disputes, generate uncertainties when deciding on investments, and can undermine confidence in capital markets.
The launch of a set of new global standards is the latest step in the International Valuation Standards Council’s mission to raise the quality of valuation practice and the profession.
IVS 2017 comprises five General Standards and six Asset Standards. The General Standards set requirements for the conduct of all valuation assignments, including establishing the terms of a valuation engagement, bases of value, valuation approaches and methods, and reporting. The Asset Standards include requirements related to specific types of assets, including background information on the characteristics of each asset type that influence value and additional asset-specific requirements regarding common valuation approaches and methods.
While the legislative and case law requirements of individual countries will continue to take precedence, it is expected that the international standards should be applicable to all relevant valuation assignments.
Simon Chapman, head of Burgis & Bullock’s valuations practice, commented, “IVS 2017 should help improve confidence in valuations and drive improvements in the profession. I am often called in to resolve disputes arising from flawed valuations undertaken by generalist accountants and unqualified brokers. Any moves to create greater rigour and consistency in valuations are to be welcomed.”
For further information and advice on valuation matters please contact:
Simon Chapman
E: simon.chapman@burgisbullock.com
D: 01926 468 705
M: 07831 255 302