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Expert seeks new valuation standard in Nigeria

Mr. Jimmy Olayinka Omotosho, a portfolio executive at Broll Nigeria has stated that valuations are widely used and relied upon in financial and other markets, whether for inclusion in financial statements, for regulatory compliance or to support secured lending and transactional activity. This he said at the training forum of the Nigerian Institution of Estate Surveyors and Valuers, NIESV Lagos state branch.

Omotosho who spoke on the theme – Valuation Reporting Standards in Compliance with IFRS & IVSC’ described the International Valuation Standards Council, IVSC as an independent, not-for-profit, private sector organisation that has a remit to serve the public interest. He added that the IVSC’s objective is to build confidence and public trust in the valuation process by creating a framework for the delivery of credible valuation opinions by suitably trained valuation professionals acting in an ethical manner.

Delivering a paper entitled International Valuation Standards, Omotosho said the International Valuation Standards, IVSs contain procedures for undertaking valuation assignments using generally recognised concepts and principles, with supporting guidance to assist the consistent application of those principles. He noted that the IVSC also promotes standards for the conduct and competency of professional valuers.

“The IVSC Standards Board is the body responsible for setting the IVS. The Board has autonomy in the development of its agenda and approval of its publications. In developing the IVSExpert the Board follows established due process in the development of any new standard or related pronouncement, including consultation with providers and users of valuation services and public exposure of all new standards or material alterations to existing standards.

“The Board liaises with other bodies that have standard-setting function in the financial markets. It conducts outreach activities including round table discussions with invited constituents and targeted discussions with specific users or user groups”, he stated.

Omotosho who explained that the objective of the IVS is to increase the confidence and trust of users of valuation services by establishing transparent and consistent valuation procedures, said a standard will do one or more of identifying or developing globally accepted principles and definitions.

He added that a standard will further identify and promulgate procedures for the undertaking of valuation assignments and the reporting of valuations, identify specific matters that require consideration and methods commonly used for valuing different types of asset or liability and identify appropriate valuation procedures for the major purpose for which valuations are required.

Pointing out that all RICS members, whether practicing individually or within an RICS-regulated or non-regulated firm, who provide a written valuation are required to comply with the international valuation standards issued by the International Valuation Standard Council, he said RICS professional standards and valuation practice statements are consistent with the principles and definitions of the IVS as at 1 January, 2014. He noted that RICS considers that a valuation that complies with these standards and statements will also comply with the IVS.

“It is important to note that these bases of value are not necessarily mutually exclusive. The worth of a property or asset to a specific party, or the fair value of a property or asset in exchange between two specific parties may match the market value even though different assessment criteria are used.

Because bases other than market value may produce a value that could not be obtained on an actual sale, whether or not in the general market, the valuer must clearly distinguish the assumptions, or special assumptions that are different from, or additional to, those that would be appropriate in an estimate of market value.

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