IVSC Launches Consultation on Revised IVSs d Consulation on
In late April 2023, the International Valuation Standards Council issued an Exposure Draft of proposed changes to the current standards. Comments are invited before 28 July 2023.
Members of organisations that have formally adopted or recognised the IVS need to pay particular attention to the proposed changes. Even where the standards are not formally adopted or mandated, the IVSs represent internationally agreed norms of good valuation practice and therefore potentially influence many valuations. It is therefore important that valuers and those who rely on valuations engage with this consultation.
The “General Standards” contain principles which the IVSC deem are applicable to the valuation of any type of assets. There are currently five General Standards, IVS 101 – IVS 105. It is proposed to retire one of these, IVS 102 Investigations and Compliance, and bring in three new General Standards. The current IVS Framework becomes IVS 100 and there are two new standards proposed, IVS 104 Data and Inputs and IVS 105 Valuation Models.
Another change is to move much of the explanatory detail from the main body of each standard into Appendices, with the aim of making the key principles easier to identify and follow.
We have concerns that the proposals have done little to address the lack of clarity as to the whole purpose of the standards. We highlight the following:
The inherent contradiction between the statement in the Foreword that the purpose of the standards is to "...establish appropriate global requirements for valuations that equally apply to all parties involved in the process..." but then referring throughout to actions to be taken by "the valuer". The IVSC has no jurisdiction over valuers. It should stick to identifying and specifying the principles for a valuation.
Some steps have been taken to better distinguish actions that are mandatory for an IVS compliant valuation from supporting information. Such information is necessary to support consistent application of the principles but cannot be mandatory for all valuations because of the sheer diversity of situations in which they needed. However, the Appendices are consistently undermined by the use of the auxiliary verb "must" and by the redefining of "should" in the Glossary in a way that makes it effectively indistinguishable from must.
We are concerned that the amount of "educational" or "how to value" content has further increased. This is not the role of standards, which should just focus on setting common standards for the provision of valuations, not trying to educate valuers.
The standards still do not clearly explain the distinction between an assumption and a special assumption and even include incorrect examples.
We have now completed and submitted our comments on the Exposure Draft to the IVSC. These can be viewed using the links below.