International ValuationStandards CouncilValuation – Profession or Industry?Chris Thorne – IVSC Technical DirectorCBAN Sao Paulo10 October 2012 1
What is a profession?A learned and respected body of individuals • Training – university level. • Code of Ethics. • An organised body to create and uphold standards for the above • Continuing Professional Development • Monitoring and Oversight 2
What of Valuation? • Developed as secondary specialisation by experts in different types of asset. • Led to fragmentation by asset type. • Unintended consequences of legislation. • Always a grudge purchase. • Regarded as technique rather than profession • Who cares about valuation? 3
What do others think? • G20 – in 2009 recognised valuation as being contributory factor to financial crisis… • …but asked accountants (IASB) to fix it! • Scepticism around fair value measurements under IFRS. • SEC comments 2005 and 2011. 4
The case for Valuation • An essential lubricant of financial system; • Relied on by investors worldwide for investment decisions; • Regulatory Interest, eg PCAOB FRC Prudential Regulators 5
Valuation needs a voice • Poor understanding of valuation by financial regulators, eg: AIFMD EIOPA IOSCO – CIS proposals • Input to IASB so that they can decide when value is an appropriate measure, not how value is determined. 6
The IVSC – our objectivesPrimary objectives:• Developing high quality international standards and supporting their adoption and use;• Facilitating collaboration and cooperation among its member bodies;• Collaborating and cooperating with other international organisations;• Serving as the international voice for the valuation profession. 7
The IVSC – how do we work?The IVSC has no powers. Its authority comes from:• Consulting with valuation users and regulators to identify their concerns;• Working with professional valuers to identify solutions;• Developing and promoting those solutions.Enforcement of and compliance with IVS is by thoseadopting the standards, e.g. regulators, professionalbodies, clients. 8
The IVSC – Professional Board Projects IVSC cannot build a profession on its own. Partnership with professional bodies. Diversity can be a strength if used to develop specialisms that are all focused in same direction. Everyone gains if different bodies work together to identify common interest and then promote those interests consistently. A united profession needs more than common technical standards, eg: shared core competencies, shared ethical standards, a single body to interact with other global bodies, a recognisable common title, effective oversight (self regulation) 9
The IVSC – Professional Board ProjectsProjects to help Development of Profession• Code of Ethical Principles for Professional Valuers (published late 2011)• Guidelines for the development and reporting of fairness opinions. (ED March – June 2012)• Guidance for Valuers on the Audit process. (ED published March 2012)• Competency Framework for Professional Valuers (expected July 2012) 10
A modern professionTraditional Values of learning and public trust stillapply but: • Inclusivity not exclusivity • Transparency and accountability • Partnership with governments and regulators Governments and Regulators dislike exclusive professional “clubs” that only act in commercial interests of members. 11
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