Why Standards?

These standards provide international accord as a guide for all States of the world

sset valuation has its roots in classical and contemporary economics. Valuation principles and techniques were established, and in the main were similar, in many countries prior to the 1940s. However, recognition of valuation as a profession developed after the 1940s.

Prior to the 1980s the development of valuation as a profession took place within many large and small nations, but without an international focus. There were many similarities among these countries as to what constituted a professional Valuer, such as an appropriate college or university degree; specialised professional training; practical, directed experience; demonstrated competence, honesty, and objectivity; and recognised high character. Professional valuation bodies in various countries conferred professional designations and status to those who at least met specified education and experience requirements.

During the 1960s and 1970s several national valuation bodies developed and promulgated Standards of Professional Practice for their members. Others followed. In some countries Codes of Professional Ethics were also introduced. The contents of these Standards combined professional considerations with the practical needs of the market place. In some countries the Standards were incorporated partly or fully into national laws and regulations. Some professional bodies created review and enforcement procedures leading to censure or loss of professional recognition for a member who seriously violated either the standards or related ethical provisions.

By the late 1970s as these movements continued it became apparent that international financial developments and the globalization of markets reached the stage that international valuation standards were sorely needed. It was obvious that without international agreements regarding valuation standards there was potential for confusion and mistakes to occur. It was less obvious, however, that domestic standards in various countries were also being inhibited. It was also not well understood that important differences of viewpoints among the professional valuation bodies of several countries could lead to unintentional misunderstandings.

Equally important, simultaneous business and economic changes occurred rapidly within and among nations, giving rise to expanded recognition of the market importance of professional asset valuations. Competent, objective, professionally developed valuations are required for a variety of business activities. Their importance in reflecting current values for financial reporting in particular has seen growing recognition. There is an increasing movement towards reporting asset values for accounting and financial purposes on the basis of current valuation in place of historical cost.

Today, the International Valuation Standards Committee is dedicated to the principle that the valuation discipline is a profession that evidences a long-standing body of knowledge, identified and accepted scientific and other methodologies and procedures, an important public need for services, generally accepted ethical principles, and potential for harm to individuals and society at large where incompetence, misunderstanding, fraud or improper behavior occurs. Accordingly, these Standards provide international accord as a guide for all States of the world, and as a means of identifying departures where they occur.

page updated 17-Aug-2007

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