IVSC plans future agenda for valuation standards

The International Valuation Standards Council is asking for suggestions on future revisions to its International Valuation Standards.

Cohn, Michael

The IVSC opened a consultation Monday on its future agenda. In January, the organization completed its work on creating a set of global standards for the valuation profession known as IVS 2017. It includes both general standards and asset standards. The general standards impose new requirements for conducting all valuation engagements, including establishing the terms of the engagement, valuation approaches and methods, and reporting. The asset standards detail requirements for specific types of assets.

After releasing IVS 2017, the IVSC is now considering where it should focus its efforts for further improvements and has launched a consultation to get feedback on topics that are already part of its current agenda and other topics that stakeholders believe should be added to the agenda.

The IVSC’s Standards Boards is spearheading the process and has already identified several major valuation topics that it believes should be examined. They include non-financial liabilities, discount rates, early-stage valuations, biological assets, extractive industries and inventory. The IVSC already plans to make targeted improvements to several parts of IVS 2017, including control premiums and discounts for lack of control, capital structure considerations, and development values.

“Our latest consultation reflects IVSC’s continuing commitment to continue to develop high quality international valuation standards which underpin consistency, transparency and confidence in valuations across the world,” said IVSC CEO Nick Talbot in a statement. “Valuations are vital to the global economy and are relied upon in financial and other markets. It is hugely important that valuation standards evolve and develop so that they are fit for purpose.”

In terms of potential future projects, the IVSC is considering some medium- and long-term goals that are not considered particular priorities. They include an analysis of commercial lease transactions, specialized public service assets, sustainability and renewable energy, automated valuation models and data analytics, valuation of personal property such as art and antiques, recovery and resolution, price vs. value, distressed situations, valuation in markets susceptible to change, privatization, and alternative financing arrangements.

The IVSC has posted an Invitation to Comment consultation document on its website that will be open for 90 days, until Aug. 15 2017. All the comments it receives from the consultation process will appear on the IVSC’s website. The IVSC plans to publish agenda consultations every year to make the standard-setting process more open and consultative.

“IVS 2017 was designed with the specific aim of allowing continued, targeted improvements to the standards from our new expanded Standards Boards,” IVSC Standards Review Board chairman Mark Zyla in a statement. “Our IVS Agenda reflects the outcome of initial meetings of IVSC’s Tangible Assets, Business Valuation and Standards Review Board, where we distilled the main findings of our own Gap Analysis and collated the many valuable suggestions for revisions to IVS from stakeholders in previous consultations.”

He hopes to receive views and recommendations on the agenda from practitioners, valuation professional organizations, academics, corporations and regulators, and to work collaboratively with them to improve the standards.