As part of its suite of Technical Information Papers (TIP), the International Valuations Standards Council (IVSC) recently issued TIP 4 – Valuation Uncertainty.
The objective of the TIP is to provide guidance on factors that may give rise to material valuation uncertainty in the reported valuation figure in a way that is useful to those who will be relying on the valuation.
The focus of the TIP is valuation uncertainty that it is unavoidable, regardless of the terms under which the assignment is undertaken.
The TIP examines the nature of valuation uncertainty and discusses its common causes, when it may be considered material, and the types of disclosure that may be appropriate.
Examples of material valuation uncertainty are included in the TIP.
The TIP may be accessed via IVSonline. For information regarding access IVSonline, refer to this website.
The Australian Valuation Standards Board (AVSB) considered the document and supported the need for further guidance to Australian Property Institute (API) members, particularly in dealing with valuation uncertainty surrounding natural disasters such as bushfires, earthquakes or floods.
The Victorian Division of the API has been tasked with drafting guidance for consideration by the AVSB.