International Valuation Standards (IVS) – Effective 31 January 2025,
I. INTRODUCTION TO IVS
A. Overview
Issued by: International Valuation Standards Council (IVSC), an independent, not-for-
profit organization.
Purpose: Enhance public trust in valuations through transparent, consistent global
standards applicable across asset types.
Effective Date: 31 January 2025 (early adoption permitted from 31 January 2024).
Nature: Principle-based; can be adopted voluntarily or by mandate of jurisdictions or
professional bodies.
II. STRUCTURE OF IVS
1. General Standards
Applicable to all valuation types:
IVS 100: Valuation Framework
IVS 101: Scope of Work
IVS 102: Bases of Value
IVS 103: Valuation Approaches
IVS 104: Data and Inputs
IVS 105: Valuation Models
IVS 106: Documentation and Reporting
2. Asset Standards
Specific to asset/liability types:
IVS 200–500: Covers business interests, intangible assets, real property, plant/equipment,
inventory, financial instruments, etc.
III. DEFINITION OF KEY TERMS (Selected)
Term Definition
Valuation The process of forming an opinion of value as of a specific date.
Term Definition
A qualified, unbiased, and competent individual or group conducting a
Valuer
valuation.
Estimated amount for which an asset would exchange in an arm’s-length
Market Value
transaction between knowledgeable, willing parties.
Investment Value to a specific owner based on their investment objectives (also called
Value "worth").
Equitable A fair value between specific parties, factoring in their particular
Value circumstances.
Synergistic Value added from combining assets that is greater than their individual sum
Value (often called "marriage value").
Agreement between valuer and client defining the valuation's purpose,
Scope of Work
assumptions, methods, and responsibilities.
Premise of
Assumed use of the asset (e.g., highest and best use, current use, liquidation).
Value
IV. DETAILED CONTENT AND ANALYSIS
IVS 100 – Valuation Framework
Valuer Principles: Must demonstrate integrity, objectivity, competence, and professional
scepticism.
Quality Control: Valuers must document procedures ensuring independence, accuracy,
and compliance with IVS.
Use of Specialists: Acceptable if the valuer discloses and understands the specialist's
work.
IVS 101 – Scope of Work
A mandatory written agreement outlining:
o Asset(s)/liability(ies) being valued
o Valuation date and currency
o Intended use and users
o Basis of value
o Any assumptions and limitations
o Environmental, Social, and Governance (ESG) considerations
Required for all valuations and valuation reviews.
IVS 102 – Bases of Value
A. IVS-Defined Bases
1. Market Value (A10) – Standard definition used in most real property appraisals.
2. Market Rent (A20) – Lease valuation counterpart of market value.
3. Equitable Value (A30) – Reflects fairness for specific parties (not market-based).
4. Investment Value (A40) – Reflects value to a specific owner or investor.
5. Synergistic Value (A50) – Arises when asset combinations result in added value.
6. Liquidation Value (A60) – Value in a forced sale or orderly liquidation scenario.
B. Other Bases
Fair Value (IFRS) – Based on IFRS 13 standards.
Fair Value (Legal/Statutory) – Defined by specific jurisdictions.
C. Premises of Value
Highest and Best Use (A90) – Legally permissible, physically possible, financially
feasible use that results in the highest value.
Current Use (A100) – Current manner in which the asset is used.
Orderly Liquidation (A110) – Seller is compelled to sell but has time for proper
marketing.
Forced Sale (A120) – Immediate sale under duress, no proper marketing.
IVS 103 – Valuation Approaches
Three primary approaches:
1. Market Approach
Compares asset with recent sales of similar assets.
Emphasizes observable data.
Uses comparables and units of comparison (e.g., per sqm price, EBITDA multiples).
2. Income Approach
Converts future economic benefits (income, cash flows) into a present value using a
discount rate.
Used for income-producing assets or business valuation.
Sensitive to forecasting and risk estimation.
3. Cost Approach
Based on the cost to recreate or replace the asset, minus depreciation/obsolescence.
Best for unique, non-income-generating assets or where market comparables are lacking.
V. OTHER ESSENTIAL STANDARDS
IVS 104 – Data and Inputs
Data must be reliable and relevant.
ESG factors may influence valuation.
Inputs are categorized as observable (market-based) or unobservable
(estimates/assumptions).
IVS 105 – Valuation Models
Quantitative methods that convert inputs into value.
Can include AVMs (Automated Valuation Models), but must still involve valuer
judgment.
IVS 106 – Documentation and Reporting
Reports must clearly explain:
o Valuation process and rationale
o Approaches and methods used
o Basis and premise of value
o Data sources and assumptions
o Compliance with IVS
VI. CRITICAL FACTS & REMINDERS FOR THE
BOARD EXAM
Effective Date: IVS 2025 standards apply to valuations done on or after 31 January
2025.
Market Value is the most commonly used basis in real property appraisals.
Scope of Work must always be agreed upon in writing.
Valuer’s Responsibility: Ensure compliance with IVS unless overridden by law—
disclose such conflicts.
Entity-Specific Factors (e.g., internal tax benefits) are excluded from most market-based
valuations.
Professional Judgement & Scepticism are critical across all stages of the valuation.
Use of Multiple Approaches: Encouraged where data is insufficient for one method
alone.
IVS 104 – Data and Inputs
Purpose:
Establishes how to select and use data and inputs in valuations.
Key Points:
Inputs come from data, assumptions, and adjustments.
Emphasis is on observable data (e.g., market prices).
Valuer’s Responsibility: Select and assess relevant data using professional judgment
and scepticism.
✅ Characteristics of Relevant Data:
1. Accuracy – Free from errors and bias.
2. Completeness – Adequate to address attributes of asset/liability.
3. Timeliness – Reflects market conditions as of valuation date.
4. Transparency – Traceable to origin.
ESG Appendix:
Valuers must assess Environmental, Social, and Governance (ESG) factors if they materially
affect value:
Environmental: Climate risk, pollution, disasters.
Social: Working conditions, privacy, rights.
Governance: Ethics, board diversity, rule of law.
IVS 105 – Valuation Models
Definition:
A valuation model is a quantitative implementation of a method that converts inputs into value.
Core Requirements:
Models must be fit for purpose, reflecting the scope, method, and asset type.
May be internal or from a specialist/service organization.
Characteristics of an Appropriate Model:
1. Accuracy – Delivers valid output.
2. Completeness – Covers all necessary asset features.
3. Timeliness – Reflects current market.
4. Transparency – Understandable and disclose limitations.
Valuer’s Tasks:
Select model with professional judgment.
Test and calibrate the model.
Document its inputs, outputs, assumptions, and quality control.
IVS 106 – Documentation and Reporting
Purpose:
Ensures transparency, consistency, and clarity in valuation reporting.
Documentation Must Include:
Scope of work
Methods and approaches used
Data and assumptions
Professional judgments and limitations
Records of valuation work (electronic/paper)
Valuation Reports Must Include:
Identity of valuer, client, intended use/user
Valuation date, basis of value, approach, and method
Data sources and ESG factors
IVS compliance statement and valuation rationale
Special assumptions or use of specialists (if any)
IVS 200–500 – Asset Standards Summary
These standards apply in addition to General Standards for specific asset classes.
IVS 200 – Businesses and Business Interests
Considers entity-specific factors (e.g., synergies, goodwill)
Use of income and market approaches is common
IVS 210 – Intangible Assets
Includes trademarks, patents, licenses, goodwill
Often uses income approach (relief-from-royalty, excess earnings)
IVS 220 – Non-Financial Liabilities
Includes warranties, decommissioning liabilities
Often valued via income or cost approach
IVS 230 – Inventory
Valued at net realizable value or replacement cost
May require adjusting for obsolete stock
IVS 300 – Plant, Equipment and Infrastructure
Tangible assets used in operations or held for lease
Often valued using cost approach
Consider lifecycle (useful life vs. service life)
ESG and maintenance implications must be factored
IVS 400 – Real Property Interests
Applies to land and buildings, leased or owned
Use of market, income, and cost approaches based on asset nature
Highest and best use often emphasized
IVS 410 – Development Property
Includes ongoing or proposed developments
Requires "as-is" and "as-completed" values
Income approach with risk-adjusted discount rates often applied
Risk to lenders must be highlighted (e.g., void contracts, insolvency)
IVS 500 – Financial Instruments
Includes stocks, bonds, derivatives, hybrid instruments
Often complex, requiring AVMs or specialist models
Must use observable market data where possible
Risk management and quality control are critical
Summary of Key Changes in IVS 2025 Edition
Section Key Update
General Standards Improved structure; clearer responsibilities and guidance.
IVS 104 Introduced stronger emphasis on ESG factors.
IVS 105 Clarifies testing, documentation, and limitations of valuation models.
More detailed reporting requirements, especially on ESG and
IVS 106
assumptions.
Expanded guidance on complex assets (development property,
Asset Standards
financial instruments).
Scope of Work (IVS
Mandatory agreement in writing; tightens compliance.
101)
Must now explicitly explain ESG, data sources, and modelling
Documentation
rationale.