This article was first published in the September 2016 UK edition of Accounting and Business magazine.

Whether you’re acquiring or selling a business, undertaking tax planning, preparing financial statements, investing in shares or buying your own home, the financial decision will be underpinned by a valuation. But the wide variety of valuation methods and approaches employed globally makes it difficult for many international businesses to understand the true value of assets and to trust the numbers.

Valuation in financial reporting has become a key discussion for regulators around the world. The Financial Accounting Standard Board (FASB) and the International Accounting Standards Board (IASB) now have a converged fair value standard, and many other regulators have valuation as a priority for 2016.

But given the global nature of business, why do we still not have a global set of valuation standards? This would promote public trust in valuation and enable consistency and comparability in financial reporting. The absence of a single professional framework makes it more difficult for those who hire valuation professionals and those who use their work to trust the number provided.

The way ahead

Two types of valuation standard are needed.

First, there has to be a robust set of technical standards explaining how to value different types of assets for different purposes. This would include how the valuation is performed, the level of detailed analysis required for different purposes, and what the minimum content of a valuation report should be.

Second, there has to be a professional framework covering education, ethics, the level of work to be performed and CPD.

Many professional valuation bodies exist. The most prominent are the International Valuation Standards Council (IVSC), The Appraisal Foundation (TAF), the Royal Institution of Chartered Surveyors (RICS), the CFA Institute, the American Society of Appraisers (ASA) and the Canadian Institute of Chartered Business Valuators (CICBV). Each requires different levels of study, work experience and CPD. So while a global set of technical standards would be a great step forward, a valuation that is robust needs to be calculated by a highly trained and qualified valuer.

PwC partner Andreas Ohl says: ‘Robust technical standards are important to improving financial reporting valuations but are only part of the puzzle. Valuation models are only as good as the quality of the information going into them. If the inputs are not supportable, the end valuation will still be of limited value to the public.’

Public trust in valuation will require both the technical standards and the professional framework to be consistent.


The IVSC has stepped up its role to promote a robust set of global technical valuation standards. It is in the process of improving and clarifying a set of standards through a series of exposure drafts. It has set up a more robust standard-setting process akin to that of the IASB, with IVSC chairman (and former IASB chairman) David Tweedie heading up the move forward.

The IVSC has support from some of the big valuation and accountancy firms, many of whom have staff seconded to or sitting on the many boards and councils. Two recent appointments – Howard Wetston, former chair and CEO of the Ontario Securities Commission, and Tom Seidenstein, vice president of strategy and policy research at Fannie Mae – illustrate the support from high-profile individuals and a real commitment to moving towards a global set of standards.

One positive step has been the recent harmonisation of valuation standards from TAF and the IVSC. The two bodies have set out the steps needed for dual compliance in a guide entitled A bridge from USPAP to IVS, which is available at


A number of obstacles will make convergence in valuation standards a challenging path.

Valuation is subject to national, legal, economic, political and cultural systems, which differ hugely around the world. These give rise to differing definitions and perception of value. The availability and flow of information also varies, presenting other challenges. Even the TAF/IVSC harmonisation report highlights some unavoidable differences, such as the need for international valuation standards to be applicable across the globe, whereas USPAP is designed for use in the US and has to reflect US law and practice.

Valuations are used for many different purposes. How to value something for financial reporting could be very different from valuing something for tax. It is therefore difficult to produce one set of technical standards that can be used in every scenario.

Convergence has proved elusive in other arenas: International Financial Reporting Standards (IFRS), while a fantastic step forward in achieving global consistency and comparability in accounting, have struggled to converge fully with US GAAP. The most recent example of this is the new leases standard, with the IASB and the FASB publishing two different models.

There are some significant barriers before a global set of enforceable valuation standards emerges. The IVSC is taking positive steps and enrolling the help of some key players in the market, so if there was ever a time to move forward with this vision, that time is now.

Ruth Preedy is a director in PwC’s global accounting consulting services