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IVSC Setting Valuation Standards


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International Valuation Standards Council

Published in: Economy & Finance
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IVSC Setting Valuation Standards

  1. 1. 27/11/2014 1 Setting Standards in Valuation Chris Thorne – Director Valuation Standards Valuation Risk Forum 26 November 2014 INTERNATIONAL VALUATION STANDARDS COUNCIL Why Standards? • Standards protect the public interest – Improve consistency (helps preparers and users) – Identify best practice (and what is not) – Aid comprehension by investors – Effective standards can reduce regulatory intervention (and costs of compliance) – International standards assist cross border investment and transactions 2
  2. 2. 27/11/2014 2 Why Standards? • Valuation lacks organisation – Lack of professional infrastructure – Fragmentation across asset classes and industry sectors – Lack of recognition by policy makers – Low levels of public trust 3 The IVSC’s Mission • To establish and maintain effective, high-quality international valuation and professional standards, and to contribute to the development of the global valuation profession, thereby serving the public interest. 4
  3. 3. 27/11/2014 3 Strategic Objectives • Developing and promoting a single set of high quality global valuation standards. – The International Valuation Standards (IVSs) set protocols for the process of undertaking and reporting of valuations. • Developing and promoting International Professional Standards (IPSs) – The IPSs will serve as a benchmark for professional bodies to drive global consistency in competency and ethics for professional valuers. 5 6 Global reach Countries with IVSC members
  4. 4. 27/11/2014 4 The IVSC - How we are Organised Board of Trustees: Strategy, governance and fund-raising Standards Board: Sets standards for Valuation IVS Professional Board: Sets standards for Valuers IPS Develops and promotes profession globally 7 The IVSC - How we are Funded • Membership – About seventy professional organizations with members involved in providing valuation services from over fifty countries. – About twenty institutional (ie public sector or not for profit) and academic members. • Sponsorship – Twenty sponsoring organizations including six global accounting networks, banks and large valuation firms. 8
  5. 5. 27/11/2014 5 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 • Standards set through transparent process, including consultation. Enforcement of and compliance with IVS is by those adopting the standards, e.g. regulators, professional bodies, clients 9 Engagement with other organisations • Active dialogue with other standard setters that reference valuation to promote consistency, eg IASB, IAA, IPEV and CFA Institute (GIPS). • Agreement with IFAC signed in 2010. • IVSC represented on IAASB CAG. • Statement of Protocols signed with IASB in February 2014. • Engagement with intergovernmental bodies, eg IOSCO, Financial Stability Board, Basel Committee, APEC, European Union. 10
  6. 6. 27/11/2014 6 The International Valuation Standards - Objectives • Building Confidence and Trust: The IVSs require transparency in the set-up, execution and reporting of valuation assignments, with the objective of building trust among those who rely on valuations. • Narrowing Differences in Valuation: The IVSs provide guidance on matters that should be considered when valuing different types of asset for different purposes with the objective of providing greater consistency. 11 The IVSs - Overview • IVS Framework defines and describes concepts and principles applicable to most purposes for which valuation is required. • IVS General Standards set requirements for accepting, undertaking and reporting applicable to most types of valuation. • The IVSs include guidance on how these principles should be applied to different types of asset or for different valuation purposes. 12
  7. 7. 27/11/2014 7 The IVSs - Asset Types Covered • Business Interests • Intangibles • Plant and Equipment • Real Property • Financial Instruments 13 The IVSs - Valuation Purposes • Financial Reporting • Secured Lending • Recovery and Resolution (pending) 14
  8. 8. 27/11/2014 8 Current Standards Board projects • Liabilities • Derivatives - Exposure Draft for equity derivatives currently open for comment. • Credit and Debit Valuation Adjustments • Funding Valuation Adjustments • Valuations for Resolution and Recovery Biennial review of all IVSs in issue – exposure draft expected Q1 2015 15 IVSC Professional Board • International Professional Standards to be developed for: – Entry Requirements for Education Programs – Technical Competence – Professional Ethics and Attitudes – Practical Experience – Continuing Professional Development 16
  9. 9. 27/11/2014 9 IVSC Professional Board - IPSs • IPSs will set common benchmark for individual professional bodies in setting their own criteria for issuing their members with credentials and monitoring their conduct. • The IVSC intends to develop programme to monitor compliance with IPSs by member bodies, but cannot and will not be involved in credentialing or disciplining of individual valuers. 17 Questions?