Valuation Standards Board of ICAI has issued ‘ICAI Valuation Standards (IVS-101, 102, 103, 201, 202, 301, 302, 303)’, which are applicable from 1 July 2018. These valuation standards set out the concepts, principles, practices and procedures to ensure uniformity in approach and quality of valuation output.
Valuation field is gaining importance now and is considered as one of the most critical areas in finance and it plays a key role in many areas of finance such as buy/ sell, solvency, merger and acquisition. It also plays an important role in the Insolvency Resolution regime where Liquidation value has to be ascertained by Resolution professional through the Registered Valuers.
Looking at the importance, the ICAI has constituted ‘Valuation Standards Board’ in the year 2017-18, which looks after issuing ‘Valuation Standards’ and Guidance Materials (including interpretations, implementation, etc. of these Standards).
To meet the above objective and to standardise the various principles, practices and procedures followed by registered valuers/ valuation professionals in valuation of assets and liabilities, Valuation Standards Board of the ICAI has formulated various ‘Valuation Standards’, which set out concepts, principles, practices and procedures which are generally accepted internationally having regard to prevailing legal framework, procedures and practices in India.
Also, the Standards will provide a benchmark to the professionals to ensure uniformity in approach and quality of valuation output.
Recognising the need to have the consistent, uniform and transparent valuation policies and harmonise the diverse practices in use in India, the Council of the Institute of Chartered Accountants of India (ICAI) at its 375th meeting has issued the Valuation Standards which are 1st of its kind in India.
With a vision to promote best practices in this niche area of practice, the Standards lay down a framework for the chartered accountants to ensure uniformity in approach and quality of valuation output. The following Valuation Standards have been issued by ICAI:
|Sl. No.||ICAI Valuation Standards (IVS) No.||Subject Matter|
|1||–||Preface to the Indian Valuation Standards|
|2||–||Framework for the Preparation of Valuation Report in accordance with the Indian Valuation Standards|
|5||IVS-103||Valuation Approaches and Methods|
|6||IVS-201||Scope of Work, Analyses and Evaluation|
|7||IVS-202||Reporting and Documentation|
The Valuation Standards have been issued by the Institute of Chartered Accountants of India to set up concepts, principles and procedures which are generally accepted internationally having regard to legal framework and practices prevalent in India.
Applicability of Valuation Standards
These ICAI Valuation Standards will be applicable for all valuation engagements on mandatory basis under the Companies Act 2013. In respect of Valuation engagements under other Statutes like Income Tax, SEBI, FEMA. etc., it will be on recommendatory basis for the members of the Institute. These Valuation Standards are effective for the valuation reports issued on or after 1st July, 2018.
These standards come as ICAI’s consistent drive to guide its members for ensuring high quality work and standards.
Note: These ICAI Valuation Standards will be effective till Valuation Standards are notified by the central Government under Rule 18 of the Companies (Registered Valuers and Valuation) Rules, 2018.
ICAI’s Technical Guide on Valuation, 2018
The ICAI’s Technical Guide on Valuation aims to provide a contemporary analysis of practical issues in the process. It brings together the approaches, rules and principles involved in Valuation process as laid down by law, the statutory guidelines, and the decisions of Courts as well as established valuation practices. All these aspects together make this technical guide an encyclopedia and readily usable work on the subject.
The ICAI’s Technical Guide on Valuation begins with a discussion of the various approaches to valuation, followed by a separate chapter on the valuation of intangible and tangible assets as well as on other special considerations that influence valuation or the valuation process. The last chapter briefly outlines the manner in which members may furnish the Report on Valuation.