International Valuation Standards

 

The latest edition of the International Valuation Standards (IVS) marks an important milestone towards harmonising valuation practice worldwide. 

IVS serve as the key guide for valuation professionals globally and will underpin consistency, transparency and confidence in valuations which are key to investment decisions, financial reporting and finacial market stability.

IVS are the latest step in the IVSC’s mission to raise standards of international valuation practice as a core part of the financial system, for the benefit of capital markets and the public interest.

The Standards were drafted by the IVSC's independent technical boards and published following an extensive consultation process involving Valuation Profession Organisations, regulatory authorities, other standard setting organisations, valuation service providers, individual professionals, valuation end users and academics.

IVSC member and sponsor organisations are provided with digital copies of IVS. Non members/sponsors can access IVS through the IVSonline portal.

 

What do the International Valuation Standards cover? 

 

IVS comprises five 'General Standards' and six 'Asset-specific 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 asset valuation, including background information on the characteristics of each asset type that influence value and additional asset-specific requirements regarding common valuation approaches and methods used. The assets standards cover:

  • Businesses and Business Interests (IVS 200)
  • Intangible Assets (IVS 210)
  • Plant and Equipment (IVS 300)
  • Real Property Interests (IVS 400)
  • Development Property (IVS 410)
  • Financial Instruments (IVS 500)

The latest version of the Standards bring greater depth to the IVS, as recommended by member organisation, including the major accountancy firms and Valuation Professional Organisations.

 

How often are the IVS updated? 

 

The Standards Review Board will, through ongoing consultation, amend and approve International Valuation Standards. It will ensure that IVS add value and can be implemented by valuation professional organisations.

The Standards Review Board works closely with the relevant subject matter expert boards, which are the Tangible Assets Standards Board, the Business Valuation Standards Board and the Financial Instruments Standards Board.

The IVS are updated twice yearly on 15 January and 15 July. Published updates will become 'effective' after six months on either 15 January or 15 July.

Updates can include technical revisions to the existing text, or additions including new chapters. All proposed changes will be published in the form of Exposure Drafts on the IVSC website and put out for consultation over a minimum period of three months, prior to their publication within the IVS. 

Archived versions of IVS will be made availbale on IVSonline and, to members and sponsors, through the Members' Portal. A 'Basis of Consulsions' document will be published alongside IVS and will provide background to the latest revisions and the rationale for those changes.

 

What are valuation leaders saying about IVS? 

 

Mary Jane Andrews, CEO, Canadian Institute of Chartered Business Valuators: “The IVS is the foundation of a strong and respected global valuation profession that will benefit every VPO and valuer, regardless of where they work.”

European Banking Authority: “The IVS represent an authoritative source for valuation methodologies in accordance with general practice. The IVS are a non-binding although authoritative source of best market practices.”

Dr. Zhang Guochun, Secretary General, China Appraisal Society: "Convergence of valuation standards is important as economic globalisation drives the need for alignment in our systems and approach. IVS has become the most influential professional valuation standard worldwide and countries should actively seek convergence, either directly or through existing standards, so that it becomes the benchmark for valuation practice worldwide."

International Private Equity and Venture Capital (IPEV) Board: “A valuation of Private Capital Investments prepared in accordance with the IVS and following IPEV Valuation Guidelines will be consistent with the requirements of applicable financial reporting standards and will also maximise investor’s trust and confidence."

Doug McPhee, Global Head of Valuation Services, KPMG: "Alignment of globally divergent standards in a self-regulated profession is always challenging but it is also what central banks, stock exchange and other regulators are currently calling for. We are increasingly baking IVS into our engagement letters and finding the instructing lawyers very supportive of this."

Leigh Miller, Global Valuation Leader, EY: "I believe that a global set of standards for valuation is important. Having a globally aligned set of standards where people around the world can approach valuation issues in a consistent way is necessary to foster quality and international best practice."

Sean Tompkins, CEO, RICS: "We can achieve trust through a common financial language and in the case of asset valuations the IVS fulfil this role."

Sir David Tweedie, Chairman of IVSC: “IVS represents the latest in IVSC’s continuing commitment to developing high-quality valuation standards. The valuation of assets, both tangible and intangible, plays an essential role in financial and real estate markets – and therefore the global economy. IVS will be instrumental in improving valuation practice and will bring greater efficiency and confidence to capital markets.”

Nick Talbot, CEO of IVSC: “We are very thankful to our many member and sponsor organisations and other stakeholders for their input to improve the Standards. This input has ensured IVS is fit for purpose and that its adoption will boost the transparency of, and confidence in, valuations for the benefit of business and the public. IVS has been designed with the specific aim of allowing continued, targeted improvements to the standards from the new expanded Standards Board we are putting in place.”