4.

4 INTERNATIONAL VALUATION STANDARDS 3

VALUATION REPORTING

REVISED 2007

1.0 Introduction reader is advised to consult those sections of

the International Valuation Standards (IVSs)
1.1 The critical importance of a Valuation Report, that address these situations, i.e., International
the final step in the valuation process, lies Valuation Applications 1 and 2 (IVA 1 and IVA 2).
in communicating the value conclusion and
confirming the basis of the valuation, the purpose 3.0 Definitions
of the valuation, and any assumptions or limiting
conditions underlying the valuation. The analytical 3.1 Compliance Statement. An affirmative statement
processes and empirical data used to arrive at attesting to the fact that the Valuer has followed
the value conclusion may also be included in the the ethical and professional requirements of
Valuation Report to guide the reader through the the IVSC Code of Conduct in performing the
procedures and evidence that the Valuer used to assignment.
develop the valuation. 3.2 Oral Report. The results of a valuation, verbally
1.2 The Valuation Report indicates the value communicated to a client or presented before a
conclusion. It contains the name of the Valuer and court either as expert testimony or by means of
the date of the valuation. It identifies the property deposition. A report communicated orally to a
and property rights subject to the valuation, the client must be supported by a work file and at a
basis of the valuation, and the intended use of the minimum followed up by a written summary of the
valuation. It discloses all underlying assumptions valuation.
and limiting conditions, specifies the dates of 3.3 Special, unusual, or extraordinary assumptions.
valuation and reporting, describes the extent of Before completing the acquisition of a property, a
the inspection, refers to the applicability of these prudent purchaser in the market typically exercises
Standards and any required disclosures, and due diligence by making customary enquiries
includes the Valuer’s signature. about the property. It is normal for a Valuer to
1.3 Because of the key role of the Valuation Report in make assumptions as to the most likely outcome
communicating the conclusion of a valuation to of this due diligence process and to rely on actual
users and third-party readers, this Standard sets information regarding such matters as provided
forth the following as its principal objectives: by the client. Special, unusual, or extraordinary
assumptions may be any additional assumptions
1.3.1 To discuss reporting requirements consistent with
relating to matters covered in the due diligence
professional best practice
process, or may relate to other issues, such as the
1.3.2 To identify essential elements to be included in identity of the purchaser, the physical state of the
Valuation Reports property, the presence of environmental pollutants
(e.g., ground water contamination), or the ability
2.0 Scope to redevelop the property. (See para. 5.1.7 below.)
3.4 Specifications for the Valuation Assignment.
2.1 The reporting requirements addressed in this
The first step in the Valuation Process, which
Standard apply to all types of Valuation Reports.
establishes the context and scope/extent of the
2.2 Compliance with these reporting requirements assignment and resolves any ambiguity involving
is incumbent upon both Internal and External the valuation issue or problem. A Valuer ensures
Valuers. that the analyses, information and conclusions
2.3 Some instructions involving valuations undertaken presented in the report fit the specifications for
for specific purposes and property types, e.g., the assignment. The specifications for the value
financial reporting, and lending, may differ assignment include the following seven elements:
from those given for other assignments. The

VALUATION RE P OR T ING 4.4.1

INTERNATIONAL VALUATION STANDARDS 3

3.4.1 An identification of the real, personal (plant and 4.0 Relationship to Accounting
machinery; furniture, fixtures, and equipment),
business or other property subject to the valuation Standards
and other classes of property included in the
4.1 Where applicable, the Valuation Report shall meet
valuation besides the primary property category;
or exceed the requirements of the International
3.4.2 An identification of the property rights (sole Financial Reporting Standards (IFRSs)/International
proprietorship, partnership, or partial interest) to Accounting Standards (IASs) and International
be valued; Public Sector Accounting Standards (IPSASs).

3.4.3 The intended use of the valuation and any 4.2 Valuation for Financial Reporting, which is the
related limitation; and the identification of any focus of IVA 1, should be read in conjunction with
subcontractors or agents and their contribution; this Standard.

3.4.4 A definition of the basis or type of value sought;

5.0 Statement of Standard
3.4.5 The date as of which the value estimate applies
and the date of the intended report; To perform valuations that comply with these
Standards and Generally Accepted Valuation
3.4.6 An identification of the scope/extent of the
Principles (GAAP), it is mandatory that Valuers adhere
valuation and of the report. and
to all sections of the IVSC Code of Conduct pertaining
3.4.7 An identification of any contingent and limiting to Ethics, Competence, Disclosure, and Reporting
conditions upon which the valuation is based (sections 4, 5, 6, and 7).

3.5 Valuation Report. A document that records the 5.1 Each Valuation Report shall
instructions for the assignment, the basis and 5.1.1 clearly and accurately set forth the conclusions
purpose of the valuation, and the results of of the valuation in a manner that is not
the analysis that led to the opinion of value. A misleading;
Valuation Report may also explain the analytical
processes undertaken in carrying out the valuation, 5.1.2 identify the client, the intended use of the
and present meaningful information used in the valuation, and relevant dates:
analysis. Valuation Reports can be either oral [Link] the date as of which the value
or written. The type, content and length of a estimate applies,
report vary according to the intended user, legal
requirements, the property type, and the nature [Link] the date of the report, and
and complexity of the assignment. [Link] the date of the inspection;
3.6 Written Report. The results of a valuation
communicated to a client in writing, which
includes electronic communication. Written
reports may be detailed narrative documents
containing all pertinent materials examined and
analyses performed to arrive at a value conclusion
or abbreviated pertinent narrative documents,
including periodic updates of value, forms used
by governmental and other agencies, or letters to
clients.

AUSNZ 3.6.1

Refer to Business Focus 2, Reports, Content and

Compilation.

4.4. 2 A N Z VA LU AT I O N A N D P R O P E R T Y S TA N D A R DS
 INTERNATIONAL VALUATION STANDARDS 3

5.1.8 include a description of the information

AUSNZ [Link] Date of Valuation and data examined, the market analysis
All valuations undertaken by Members must performed, the valuation approaches and
be assessed as at the date of inspection of the procedures followed, and the reasoning
property except where the valuation instructions that supports the analyses, opinions, and
are to assess the value at a retrospective date. conclusions in the report;

When a retrospective valuation is reported, the 5.1.9 contain a clause specifically prohibiting the
date of the valuation must be recorded next to or publication of the report in whole or in part,
immediately above or below the valuation figure or any reference thereto, or to the valuation
in the report. figures contained therein, or to the names and
professional affiliation of the Valuers, without
In all other cases the valuation date must be the written approval of the Valuer;
clearly linked to the valuation figure in the report.
5.1.10 include a Compliance Statement that the
A Member must not provide an assessment valuation has been performed in accordance
of Market Value at a future date. This does with IVSs, disclose any departure from
not preclude members from making residual the specific requirements of the IVSs and
value forecasts for plant & equipment leasing provide an explanation for such departure in
transactions. accordance with the IVSs Code of Conduct;
When a valuation is required for financial 5.1.11 include the name, professional qualifications,
reporting purposes at a future date, the valuation and signature of the Valuer.
shall be recorded as at the date of inspection and
5.2 When Valuation Reports are transmitted
the valuer may make comment on the use of that
electronically, a Valuer shall take reasonable
valuation as at that future date subject to the
steps to protect the integrity of the data/text
relevant factors influencing the value and the
in the report and to ensure that no errors
property being unchanged as at that future date.
occur in transmission. Software should provide
In these circumstances, a Member shall include an for security of transmission.
appropriate qualification to the valuation.
5.2.1 The origin, date and time of the sending as
well as the destination, date and time of
5.1.3 specify the basis of the valuation, including receipt should be identified. Software should
type and definition of value; allow confirmation that the quantity of data/
[Link] When any component of the text transmitted corresponds to that received
valuation is valued on more than and should render the report as ‘read-only’ to
one basis of value, a clear distinction all except the author.
must be made between the bases. 5.2.2 The Valuer should ensure that the digital
5.1.4 identify and describe the signature(s) is/are protected and fully under
the Valuer’s control by means of passwords
[Link] property rights or interests to be
(PIN numbers), hardware devices (secure
valued,
cards), or other means. A signature affixed
[Link] physical and legal characteristics of to a report electronically is considered as
the property, and authentic and carries the same level of
responsibility as a written signature on a
[Link] classes of property included in the
paper copy report.
valuation other than the primary
property category; 5.2.3 A true electronic and/or paper copy of an
electronically transmitted report must be
5.1.5 describe the scope/extent of the work used to
retained by the Valuer for the period required
develop the valuation;
by law in his or her jurisdiction, in any event
5.1.6 specify all assumptions and limiting conditions not less than five years. Files of the records of
upon which the value conclusion is contingent; electronically transmitted reports may be kept
5.1.7 identify special, unusual, or extraordinary on electronic, magnetic, or other media.
assumptions and address the probability that 5.3 The presentation of a Valuation Report is
such conditions will occur; decided by the Valuer and the client based

VALUATION RE P OR T ING 4.4.3

INTERNATIONAL VALUATION STANDARDS 3

on the instructions or specifications for the

assignment. AUSNZ 5.8 Goods and Services Tax

5.4 The type, content, and length of a report In Australia a valuation shall be expressed as
depend on the intended user of the report, being GST inclusive, GST exclusive or GST free.
legal requirements, property type, and the In New Zealand non-residential valuations shall
nature and complexity of the valuation issue be stated as plus GST (if any) and residential
or problem. valuations shall be stated as including GST (if
5.5 For all Valuation Reports, sufficient any). Any exceptions to the standard treatment of
documentation must be retained in the work
GST shall be clearly stated.
file to support the results and conclusions of
the valuation and must be held for a period of
at least five years after completion. 6.0 Discussion
6.1 The context in which a valuation figure is reported
is as important as the basis and accuracy of the
AUSNZ 5.6 Value as if Complete
figure itself. The value conclusion should make
5.6.1 Proposed Improvements reference to the market evidence, and procedures
and reasoning that support that conclusion.
Where a Member undertakes a valuation of a
proposed building or other improvement the 6.2 Communicating the answer to the valuation
valuation must be expressed as “Value As If question in a consistent and logical manner
Complete” and appropriate cautions, including the demands a methodical approach that enables the
requirement for a final inspection by the valuer user to understand the processes followed and
on completion to confirm or vary the valuation their relevance to the conclusion.
figure, shall be included. 6.3 The report should convey to the reader a clear
The “Value As If Complete” valuation must be the understanding of the opinions being expressed by
market value at the date of inspection. the Valuer and also be readable and intelligible to
someone with no prior knowledge of the property.
5.6.2 Documentation
6.4 The report should demonstrate clarity,
A Member shall not undertake a valuation on an transparency, and consistency of approach.
“As If Complete” basis without appropriate and
6.5 The Valuer should exercise caution before
sufficient documentation.
permitting the valuation to be used other than for
5.6.3 Proposed Lease(s) the originally agreed purpose.
Where a Member undertakes a valuation of a
property on the assumption of a proposed lease 7.0 Disclosure Requirements
(or multiple leases), the valuation must be subject
7.1 When valuations are made by an Internal
to appropriate cautions, including the requirement
Valuer, specific disclosure shall be made in the
for finalisation and execution of the lease(s)
Valuation Report of the existence and nature
in accordance with the original proposed lease(s). of the relationship between the Valuer and
entity controlling the asset.
7.2 If a Valuer is involved in a valuation
assignment in a capacity other than as a
AUSNZ 5.7 Sale in One Line or Single Transaction
Valuer, for example, as an independent or
Where a valuation is undertaken of multiple impartial agent, as a consultant or advisor to
properties in one development the sum of the a business entity, or as a mediator, the Valuer
individual values must not be reported as the should disclose the specific role taken in each
value of the development, but if aggregated must assignment.
be reported as the total gross realisation.
7.3 The Valuer shall disclose the regulatory
A Sale In One Line valuation must be based on the framework and any departure required
assumption of a single transaction for the total from these Standards to comply with local
holding or a sale in one line to one buyer. legislation, regulation (including accounting
rules), or custom.

4.4. 4 A N Z VA LU AT I O N A N D P R O P E R T Y S TA N D A R DS
 INTERNATIONAL VALUATION STANDARDS 3

8.0 Departure Provisions

8.1 No departure is permissible from the
requirements that each Valuation Report
clearly and accurately set forth the conclusions
of the valuation, and clearly disclose any
assumptions and limiting conditions, which
affect the valuation and value conclusion.
8.2 If a Valuer is asked to perform an assignment
that departs from these requirements or calls
for something less than, or different from,
the work normally performed in compliance
with the IVSs and the IVSC Code of Conduct,
the Valuer should accept and perform such
services only when the following conditions
can be met:
8.2.1 The Valuer determines that the instructions
will not tend to mislead the intended users.

8.2.2 The Valuer determines that the valuation is

not so limited that the results are no longer
reliable and credible for the intended purpose
and use of the valuation.

8.2.3 The Valuer advises the client that the

instructions for the assignment involve a
departure from the Standards that must be
disclosed in full in the Valuation Report.

8.3 In any circumstances involving a departure

from the reporting of Market Value, the
Valuer should clearly identify that the
valuation reported is other than Market Value.

9.0 Effective Date

9.1 This International Valuation Standard became
effective 31 July 2007.

VALUATION RE P OR T ING 4.4.5