IVSC to Release 2017 Valuation Standards and Push for Worldwide Adoption

by Michael Badham, CPA, CA, CBV – Executive Director iiBV

Bali, October 12, 2016 – The International Valuation Standards Council (IVSC) held its annual meetings in Bali from Oct 10 – 12, 2016. The meetings focused on the roll out of the IVSC’s 2017 Standards and the roll-out of the IVSC’s organizational and strategic plans for the next two years. The meeting were attended by Edwina Tam, Partner Deloitte and Chair of iiBV and Michael Badham, Executive Director of iiBV.

The IVSC 2017 Standards are set to be rolled out in early 2017. These Standards represent a major step forward for the valuation profession. The Standards Board received over 100 letters that contained 1,800 specific comments on the exposure draft. Over the next month the IVSC will produce a red-line version and allow a period of time for interested parties to identify any fatal flaws. The 2017 Standards will be released in early 2017, with implementation dates for VPOs to be set. The Standards Board indicated they will also release a Basis of Conclusion document.

To demonstrate the range of international business valuation issues and complexities, the iiBV hosted a session, Around the World in 80 Valuations, that involved participants reviewing a case study and asking questions of panelists Srividya Gopalakrishnan (Duff & Phelps) and Adam Smith (IVSC). The case presented a range of complex international business valuation challenges and highlighted the importance of such case studies in professional education.

After the case study session, participants tasted various cocktails with business valuation names – a favourite seemed to be the Discount for Lack of Control.

In the future, the IVSC will be implementing a continuous improvement process for the Standards, and highlighted a Gap Analysis, asking the participants to help them prioritize which gaps should be addressed.

Two issues dominated the discussions, translation into different languages and implementation date:

  • Translation is complex and requires the careful choice of words for the 2017 Standards. The IVSC is looking to VPOs to assist with this process.
  • Implementation date of July 2017 impacts how valuers around the world will move from the 2013 Standards to the 2017 Standards. The 2013 Standards enabled compliance through disclosure. The 2017 Standards do not provide that way of avoiding compliance. All valuers will have to review their report templates for compliance.

At the Standards Board meeting, Sir David Tweedie delivered a blunt message: “valuation is not a profession. If valuers wish to become a profession, and continue with self-regulation, then VPOs must adopt IVS and enforce compliance – no exceptions.” He went on to explain that he sees a financial reporting system in which the accountants will determine when a valuation is required and the ISVC must set how a valuation must be done. VPOs can impose additional local specific legal requirements, but these should not be used as an excuse not to adopt IVS.

Sir David Tweedie addressing the AGM of IVSC in Bali.

Sir David Tweedie addressing the AGM of IVSC in Bali.

The IVSC Annual Report sets out the ISVC strategy that newly appointed CEO Nick Talbot is charged with implementing. The organization chart below sets out the new structure. The IVSC website will present the membership of each Board and Committee. Details of the organization plan can be found on page 4 of the annual report on the IVSC website.

Of critical importance to the overall strategy is the newly formed Membership & Standards Recognition Board, to be Chaired by Eric Teo. They are responsible for ensuring VPO members comply with IVS, building recognition of IVS among regulators and users of financial reports and establishing a global designation for valuers, starting with business valuers.

Next year’s AGM will be in Mexico City, October 9 – 11th 2017.