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Sir David Tweedie, IVSC Chairman, Comments on the Future of International Valuation Standards

Jun 05, 2019

Q&A: Sir David Tweedie, Keynote Speaker at ASA’s Joint 2019 Advanced Business Valuation & International Appraisers Conference

 

New York, NY-- Sir David Tweedie, Chairman, International Valuation Standards Committee (IVSC), will headline as Keynote Speaker at the American Society of Appraisers Joint ASA 2019 Advanced Business Valuation & International Appraisers Conference in New York, NY on August 25-27, 2019. As a preview for his presentation, Sir David kindly agreed to answer a few questions about International Valuation Standards, including his predictions for significant future changes, and how adoption of the standards will impact appraisers in the U.S.

Sir David is the former chairman of the International Accounting Standards Board (2001-11) and the ninetieth member of The Accounting Hall of Fame. He was knighted in 1994 and has received many other honors and awards in recognition of his for service to the accounting profession. Sir David became President of The Institute of Chartered Accountants of Scotland, the world's oldest professional accountancy body, in April 2012. He chairs the Royal Household Audit Committee for the Sovereign Grant.

Please check out his insightful comments here:

ASA: What significant changes to International Valuation Standards do you foresee coming over the next 5 years?

 
Sir David Tweedie: "Depending on how you look at it, the IVS will change significantly and profoundly over the next five years, or it will largely stay the same. That is because, for the most part, the IVS which exists today will remain in place with only a few tweaks over time – the technical boards have spent many years drafting and consulting widely on the high-level ‘general standards’ which apply to all valuations. There is a genuine sense that the current version of IVS is close to being a lasting framework for global valuation.

However, we will also see new, high-profile chapters introduced across all of the asset-specific chapters during the next five years. Our technical boards are looking at issues as broad as social value, biological assets, cryptocurrency, valuation models, non-financial liabilities and inventory, to test the need for new or revised standards. Additionally, they are geared up to respond quickly to emerging issues which may require valuation standards or guidance, such as the replacement of Inter-Bank Offered Rates (IBOR), which is a hot topic in financial markets right now.

One asset class that we expect to see grow significantly within the IVS over the next five years is financial instruments. These assets are pervasive and often extremely complex, including things like bonds, loans and structured derivatives, they pose significant valuation challenges and they have an enormous bearing on financial stability. Earlier this year we launched our new Financial Instruments Board, chaired by HSBC’s Group Chief Accountant, Gavin Francis. This board includes leaders from global banks, prudential regulators, professional bodies and valuation and data providers. Collectively, the board if looking to build and enhance the chapter (IVS 500) which covers these assets today."

ASA: How would the adoption of International Valuation Standards impact appraisers in the US?

Sir David Tweedie: "As the IVS become increasingly established in markets around the world, the benefits of their adoption by appraisers in the U.S. become more and more apparent. Investors, businesses and all stakeholders in the valuation process are eager for greater levels of transparency brought about through high-level and internationally applied standards. U.S. appraisers are already recognized throughout the world for their levels of professionalism; respected for their high-quality designations and their commitment to lifelong learning. The adoption of IVS by US appraisers will only stand to enhance this regard, both on the international stage and domestically as more and more clients find themselves investing in, and managing assets across multiple jurisdictions.

The IVSC is working in partnership with US standards setters to make the process of IVS adoption more straight forward. This includes efforts on all sides to modify and adopt existing standards so that they are consistent and increasingly using the same language and definitions for core areas of valuation work.

Ultimately, for appraisers in the US, the journey to adopting IVS shouldn’t be seen as an overly burdensome exercise. IVS are high-level and principles based, they draw on best practice from many markets around the world, including the US. In fact, it is likely to be the case that most US appraisers are already applying much of the IVS today, whether they know it or not." 

ASA: As you look forward to turning the reins of the International Valuation Standards Council over to your successor in the near term, what advice will you give and hopes will you share?

Sir David Tweedie: "With the support of the valuation professional organizations, and in particular that of my old friend Lee Hackett, IVSC has changed considerably over the last seven years.

From having a single standards board wrestling with the problem of trying to deal with the unique specialisms of tangible asset valuation, business valuation and valuing financial instruments, IVSC now has three specialist boards. It has also created a board (the standards recognition and membership board) to promote IVSC throughout the world and to check the suitability of applicants to become members of IVSC. We don’t want the 'cowboys'!

These changes reflect the increasing professionalism of the valuation profession. This profession should be sitting up there with the accountants recognized globally as a huge force for good in the public interest. The accountants realize just how important valuation is for financial reporting and its influence will increase. The internationalization of the accountants has come through having global standards. IVSC is going to create the same for the appraisers worldwide - this is the key to greater recognition of the profession. It will come as we partner with our members to agree the gold valuation standard for use globally. The infrastructure is there, the support from our members is there. IVSC is ready for take-off."