New edition of the International Valuation Standards (IVS) published

Valuations continually evolve and as a result IVS needs to be continually updated to reflect market needs. IVS has been updated to meet the following enhancement goals;

• Address changes in global markets and global valuation, including the increased use of technology and the abundance of available data sources.
• Describe roles and responsibilities of specialists and service providers increasingly use by valuers in the performance of valuations.
• Align the IVS with the valuation processes that valuers perform to provide clarity, understandability and relevance to stakeholders, including financial institutions, investors, and regulators.
• Create standards which allow for new types of assets or liabilities and expand the application of valuations into areas such as environmental, social and governance (ESG).
• Provide consistent requirements across all assets and liabilities

In conjunction with the publication of IVS (Effective 31 January 2024) the IVSC is also publishing a red line version of the latest updates to the standard. Within the red line version of IVS any new text is shown in red. Deleted text is red and struck through. Where text has been moved from different chapters or previous editions it appears in blue. Any text that is subject to no changes from the previous edition is shown in black.

The updated IVS was published on the 31st January 2024, with an effective date of 31 January 2025 for valuations performed on or after this date. The IVSC permits early adoption from the date of publication. When undertaking valuations or valuation reviews with a retrospective or historical valuation date, the valuer should document the editions of IVS that;

(a) they have relied upon, and

(b) are applicable at the valuation date.

Valuation professional organisations (VPOs), who are members of IVS, are committed to work together to enhance valuation through internationally agreed standards and the highest levels of professionalism. As part of this process our member organisations adopt and implement the latest edition IVS. However, there is no set route for adopting and implementing IVS and some VPO’s include IVS in full within their standards and make the appropriate revisions, whereas other VPOs update their standards to ensure compliance with IVS.

In order to produce an IVS compliant valuation, the valuer needs to comply with the laws and regulations in their country. IVS 100 Valuation Framework para 40.04 to para 40.05 states the following in relation to this issue:

“40.04 If legal, statutory, regulatory and/or other authoritative requirements appropriate for the purpose and jurisdiction of the valuation conflict with IVS, such requirements should be prioritised, explained, documented, and reported in order to remain compliant with IVS.

40.05 If there are any legal, statutory, and regulatory or other authoritative requirements that significantly affect the nature of the procedures performed, inputs and assumptions used, and/or value(s), the valuer must also disclose the specific legislative, regulatory or other authoritative requirements and the significant ways in which they differ from the requirements of IVS (for example, identifying that the relevant jurisdiction requires the use of only a market approach in a circumstance where IVS would indicate that the income approach should be considered).

40.06 Any other deviations would render the valuation not compliant with IVS.”

IVSC use a number of means to understand what changes are necessary in the standards, which include, but are not limited to:

• Agenda Consultation; This includes key topics to be considered by the all the boards and specific topics suggested by the Technical Boards.
• Additional Technical Revisions: Issuing an Additional technical Revisions consultation paper too discuss proposed revisions to IVS.
• Perspective papers; which can be used to engage market on potential future potential topics/revisions to IVS (i.e. Series of perspective paper on ESG)
• Direct Market Engagement; IVSC Board members may be advised through direct market engagement of standard setting meetings.
• Advisory Forum: The SRB and Technical Boards regularly update and consult with members of the Advisory Forum to understand standard setting needs within their markets and to get feedback on key issues.
• IVS Exposure Draft; IVS issues an Exposure Draft on proposed changes to IVS and directly consults with the market on proposed changes/revisions to IVS.

Changes to the IVS Standards are decided by the IVSC Standards Review Board (SRB)  and there is a public vote to approve the publication of a revised edition of IVS. The IVSC  Asset Board directly cote on changes responsible for changes to the IVS Asset Standards and the SRB overview these changes to ensure that any changes to the Asset Standards are consistent with and do not contradict the IVS General Standards.

IVS standards for International Valuation Standards and not International Valuer Standards. Valuation is a process and there are a number of people involved in this process which may involve multiple parties (including specialists and service organisations) IVS also applies to all end users of valuation which includes parties such as financial institutions, investors, valuers and regulators. The IVS applies to all parties involved in the valuation process and this may include stakeholders, including financial institutions, investors, and regulators.

The SRB and its Technical Boards consult with the market through the Agenda Consultation and through direct market engagement and engagement with the Advisory Forum to prepare its Agenda.

Furthermore, an Agenda Consultation is issued on a three-year cycle and includes proposed future topics are divided into short term, medium term and long-term projects. Much of the boards work programme comes from direct public consultation through the Agenda Consultation. The next Agenda Consultation is due to be issued in Q2 2024. 

Moreover, there are certain standing items such as revisions to IVS, which are published on a three-year cycle and will always form part of the boards work programme.

In addition, there may be issues such as change LIBOR, where the Standards Review Board or relevant Asset Board may choose to issue a perspective paper on the topic in order to deal with a market need for further clarification.

Finally, the Standards Review Board and Asset Board meet on a monthly basis (i.e. virtually or physically) and a key item on each meeting agenda is the proposed work programme for the boards

In many instances a valuer may be required to provide a valuation at an earlier valuation date for taxation or other purposes. 

IVS 100 Valuation framework clearly states the following in relation to undertaking valuations or valuation reviews with a historic valuation date.

50.02 When undertaking valuations or valuation reviews with a retrospective or historical valuation date, the valuer should document the editions of IVS that: 

(a) they have relied upon, and

(b) are applicable at the valuation date. 

It should be noted though that IVS 101 Scope of work “requires the client and valuer to agree the scope of work for a valuation or valuation review that is appropriate for the intended use.”

IVSC will be publishing a Basis of Conclusion that provides an overarching summary of the IVS consultation response and the Board rationale for any changes made or not made to the IVS Exposure Draft post consultation.

IVS is published in English and IVSC does not issue translation of IVS into other languages.

However, IVSC member organisations may wish to translate IVS into other languages such as Arabic, French, German, Spanish and Chinese.

In order to translate IVS into another language you will need to apply for a licence. You can apply for a licence by contacting Danuta Wójtowicz ([email protected]).

It should be noted that IVS only permits one translation per language so in cases where there may be several countries that use the same language (i.e. Spanish.) IVS would require the member organisations to work together to produce a translation in that language. 

IVS has been reordered to be in line with the valuation process followed by all valuers. 

The SRB noticed that the previous order of IVS did not make sense as for instance Valuation Reporting was a middle chapter whereas reporting is the last thing that a valuer does. 

As part of this process the IVSC standards Review Board and Asset Boars agree the following valuation framework that can be universally applied across all classes of assets and liabilities, ensuring a systematic approach to enhance rigour and control in valuation processes and to mitigate valuation risks.

IVS has a two-tiered hierarchy showing which standards are required through the use of must and should.

The IVS Glossary provides the following definitions for must and should:

10.19 Must: Actions or procedures that are mandatory.

10.25 Should: The valuer is expected to comply with requirements of this type unless the valuer can demonstrate that alternative actions are sufficient.

Furthermore IVS 100 Valuation Framework section 40.01 and 40.02 states the following in relation to Compliance:

40.01 In order to be IVS compliant, the valuation must meet the requirements of the General Standards, the Appendices, as well as Asset Standards, if applicable.

40.02 IVS consist of mandatory requirements that must be followed in order to state that a valuation was performed in compliance with IVS.

Yes, a hard copy of the standard will be available from March 2024 via the IVSC Online Bookstore.

An online pdf of IVS (effective 31 January 2024) will be available online from 31 January 2024.

IVS is relevant to all those involved in the valuation process, which includes stakeholders, including financial institutions, investors, and regulators.

The standards are mandatory for all those who wish to claim IVS compliant valuations.

In order to be IVS compliant, the valuation must meet the requirements of the General Standards, the Appendices, as well as Asset Standards, if applicable.

IVS General Standards apply to all valuations, whether IVS Asset Standards provide additional valuation requirements for the valuation of specific asset classes.

The IVS effective date is one year after the published standard in order to give our member organisations sufficient time to adopt and implement IVS, which in many instances will involver reviewing and or updating their standards to ensure full compliance with IVS.  

Furthermore, a number of organisations need to translate IVS into other languages and therefore the year between publication and implementation gives member organisations sufficient time to translate IVS.

In many instances it may be required to follow more than one Asset Standards. For example, when valuing a business with intangible assets it will be necessary for the valuer to follow the requirements of the IVS General Standards and the requirements contained within IVS 200 Businesses and Business Interests and IVS 210 Intangible Assets.

In order to ensure high quality consistent valuations that are in line with market needs and that meet globally accepted best market practices.

The details of the rationale behind latest updates are contained within the IVS Basis of Conclusion, which are published online.

With the exception of the IVS Code Ethical Practice of Valuers, which sits alongside IVS (effective 31 January 2025), IVS does not issue guidance which sits alongside our standards. 

However, many IVSC member organisations provide their detailed guidance in relation to IVS and this guidance will normally be found on the IVS website.

IVS 106 Documentation and Reporting now requires all valuers to include an IVS compliance statement within their valuation reports.

Within IVS 100 Valuation Framework Section 20 Valuation Process Quality Control states the following in relation to quality control undertaken by sole operators:

20.07 If the valuer is able to address valuation risk they may then perform monitoring procedures with respect to their own compliance and control policies and procedures.

IVS expands Environmental, Social and Governance (ESG) considerations in valuations across all assets and liabilities, but the impact on valuation is still in a development and additional requirements may be needed.  

The valuer should be aware of relevant legislation and frameworks in relation to the ESG factors impacting a valuation.

The impact of significant ESG factors should be considered in determining the value of a company, asset or liability.

ESG factors and the ESG regulatory environment should be considered in valuations to the extent that they are measurable and would be considered reasonable by a valuer applying professional judgement.

IVS now includes appendices in order to give more flexibility to the standard. The Appendices allow the standards to:

• to include topics within the IVS General Standards such as valuation methods, which may not apply to all asset classes.
• To include subset of topics within the IVS General Standards such as ESG considerations, which is a subset of IVS 104 Data and Inputs.

The SRB and its Asset Boards may include additional Appendices within future editions of IVS.