International Valuation Standards (IVS) : Overview

What Are International Valuation Standards (IVS)?

The International Valuation Standards (IVS) are globally recognized principles and guidelines that establish a consistent, transparent, and reliable framework for carrying out valuations of assets — including land, buildings, plant, machinery, businesses, and intangible assets.

They are published by the International Valuation Standards Council (IVSC), an independent, not-for-profit organization headquartered in London, United Kingdom.

The IVS serve as the benchmark for valuation practice worldwide, ensuring that valuations are credible, comparable, and compliant with international best practices.

These standards serve as the bedrock for professional valuation practice, ensuring consistency, reliability, ‌and openness across borders. Adopting a universal approach, IVS encompasses a complete set of principles and guidelines aimed at promoting best practices in valuation. This framework is structured to cater to various asset types ​and sectors, aiding ‍professionals in providing clear and standardized valuations that uphold ‍market integrity. To navigate the IVS effectively, it’s critically important to understand its core components, which include:

• valuation Approaches: Different ‍methods ‌utilized based on asset characteristics and intended use.
• valuation Bases: Various bases of‌ value such as fair value, market value, or investment value.
• Reporting Standards: Specific guidelines on how valuations⁣ should⁣ be documented ‍and communicated.
• Professional Considerations: Ethical obligations and ‌responsibilities of⁣ valuers in maintaining the highest standards of practice.

understanding these key elements allows professionals ​to approach valuation​ comprehensively, enhancing the quality and acceptance of their work in the global marketplace.Moreover, embracing the IVS framework not only contributes to individual ⁢credibility but also elevates the profession as a whole by fostering ​a culture of accountability and ethical practice.

The International Valuation Standards Council (IVSC)

• Founded: 1981 (originally as the International Assets Valuation Standards Committee)

• Headquarters: London, United Kingdom

• Website: www.ivsc.org

• Core Role: To develop, maintain, and promote the International Valuation Standards and enhance the global valuation profession.

The IVSC works closely with international bodies such as:

• IFRS Foundation / International Accounting Standards Board (IASB)

• World Bank

• United Nations

• Royal Institution of Chartered Surveyors (RICS)

• Appraisal Institute (USA)

• Institution of Surveyors of Kenya (ISK)

• Valuers Registration Board (VRB)

Objectives of IVS

1. Promote uniform valuation standards globally.

2. Enhance transparency and comparability of valuation reports.

3. Support financial reporting in line with IFRS.

4. Protect investors and stakeholders by ensuring reliable asset valuations.

5. Guide professional valuers in ethical and consistent practice.

6. Strengthen global confidence in valuation opinions.

Structure of the International Valuation Standards

As of the IVS 2024 (latest edition), the standards are organized into several sections:

1. General Standards

These provide principles applicable to all types of valuations:

• IVS 101: Scope of Work

• IVS 102: Investigations and Compliance

• IVS 103: Reporting

• IVS 104: Bases of Value (e.g., Market Value, Fair Value)

• IVS 105: Valuation Approaches and Methods

2. Asset Standards

These apply to specific asset categories:

• IVS 200: Businesses and Business Interests

• IVS 210: Intangible Assets

• IVS 300: Plant and Equipment

• IVS 400: Real Property Interests

• IVS 410: Development Property

• IVS 500: Financial Instruments

Core Valuation Approaches Under IVS

Valuers use three main approaches as defined in IVS 105:

1. Market Approach – based on comparable sales or market data.

2. Income Approach – based on income generation (e.g., investment or DCF analysis).

3. Cost Approach – based on replacement or reproduction cost less depreciation.

These methods ensure objectivity and consistency across different asset types and market conditions.

Key Definitions Under IVS

• Market Value: The estimated amount for which an asset should exchange between a willing buyer and a willing seller in an arm’s length transaction.

• Fair Value: Value measured for financial reporting (aligned with IFRS 13).

• Investment Value: Value to a particular investor based on individual objectives.

• Liquidation Value: Amount expected from the sale under forced conditions.

Importance of IVS to Valuers and Institutions

1. Professional Credibility

Valuations based on IVS gain greater acceptance by banks, courts, auditors, and investors.

2. Regulatory Compliance

In Kenya, the Valuers Registration Board (VRB) and Institution of Surveyors of Kenya (ISK) require registered valuers to comply with IVS and the Kenya Valuation Standards (KVS).

3. Financial Reporting

IVS ensures valuations align with International Financial Reporting Standards (IFRS) used by accountants and auditors globally.

4. Transparency and Accuracy

By adhering to IVS, valuers minimize bias, misrepresentation, and inconsistencies in valuation reports.

5. Global Recognition

Valuers who adopt IVS standards can operate and collaborate internationally with confidence.

Adoption of IVS in Kenya

Kenya, through the Valuers Registration Board (VRB) and Institution of Surveyors of Kenya (ISK), has adopted IVS as part of the Kenya Valuation Standards (KVS) framework.

These standards are applied in:

• Property valuation for mortgage and lending.

• Insurance and taxation valuation.

• Compensation for compulsory acquisition.

• Financial and accounting reporting.

• Investment and development appraisals.

Professional valuers such as Avenue Valuers Limited and Avenue Vista Property Centre follow IVS-compliant procedures in all property appraisals and consultancy assignments.

15 Frequently Asked Questions (FAQs) About IVS

1. What does IVS stand for?
   International Valuation Standards.

2. Who publishes IVS?
   The International Valuation Standards Council (IVSC), based in London.

3. When were IVS first issued?
   The first edition was published in 1994.

4. How often are IVS updated?
   Typically every 3–5 years to reflect market, legal, and professional developments.

5. Are IVS legally binding?
   Not by themselves, but many national regulators (like VRB in Kenya) make them mandatory.

6. What is the relationship between IVS and IFRS?
   IVS provides valuation guidance for assets reported under IFRS.

7. What are the main valuation bases under IVS?
   Market Value, Fair Value, Investment Value, and Liquidation Value.

8. Which organizations follow IVS in Kenya?
   VRB, ISK, financial institutions, and registered valuation firms.

9. Why are IVS important to banks?
   They ensure valuation reports used for lending are credible and standardized.

10. Can IVS be applied to machinery or plant valuation?
    Yes — under IVS 300: Plant and Equipment.

11. What is the difference between IVS and local valuation standards?
    IVS are global; local standards (like KVS) may adapt IVS principles to national context.

12. Do insurance valuations follow IVS?
    Yes, especially when determining reinstatement or replacement cost values.

13. How does IVS promote investor confidence?
    By ensuring uniform valuation methodologies and transparent reporting.

14. What is IVS 104 about?
    It defines the bases of value and their appropriate use.

15. Who enforces IVS compliance in Kenya?
    The Valuers Registration Board (VRB) and the Institution of Surveyors of Kenya (ISK).

Related Standards and Frameworks

Key Principles for Accurate and Reliable valuations

Accurate⁤ and reliable valuations are fundamental to making informed financial decisions, whether for investment, insurance, or sale purposes. Key principles guiding these valuations ensure that they reflect the ​true worth of⁣ an asset. A few cornerstone elements include:

• Market Consistency: Valuations should ⁣align with current ​market conditions and trends, ⁣reflecting the overall sentiment ⁢and behavior of buyers and sellers.
• Data Integrity: ​ Utilizing verified, ​high-quality data sources enhances the credibility‌ of the valuation process. Quality over quantity is vital.
• transparency: Clear documentation of methodologies,​ assumptions, and ⁤data sources promotes trust in the⁤ valuation results.
• Professional Judgement: Experienced ‌valuers bring critical insights and perspectives that standard data alone cannot provide, ensuring‍ a more nuanced understanding of the asset’s value.

Best Practices ⁣for Complying with IVS

Successfully aligning with⁢ International valuation Standards (IVS) in various markets requires a meticulous approach that includes understanding local regulations and cultural nuances. Key steps to ensure compliance include:

• Conducting thorough market research ⁤ to grasp local valuation ‌practices and economic factors.
• Establishing strong relationships with local valuation experts who are well-versed in IVS.
• Adapting ‍valuation methodologies ‌to align with both IVS and regional requirements, such as adjusting for local risk factors.

Additionally, maintaining transparency and consistency throughout the valuation process is critical. ​Consider utilizing ‌digital⁣ tools and platforms to streamline documentation and reporting. Best practices⁣ involve:

• Regularly updating internal ⁣procedures to reflect⁢ any changes in IVS or‌ local laws.
• Implementing​ quality control measures through peer reviews to ⁢validate findings against both IVS and ‍local ​standards.
• Engaging in continuous education and⁢ training for your valuation teams to familiarize them with ⁤evolving standards and best practices.

Taking these proactive steps ⁣can definitely help valuation professionals navigate the complexities of⁢ applying IVS ​across diverse markets, ensuring compliance and fostering trust among stakeholders.