Accountants given drafts by valuers

Press, 14 April 1984, Page 24

Accountants given drafts by valuers

The New Zealand Institute of Valuers has already made submissions to the Society of Accountants on the treatment of valuations of property and other company reporting, says the institute’s general secretary, Mr K. M. Allen, in a statement

Mr Allen was responding to comments made recently about the actions of valuers in performing valuations for corporate business purposes. The institute has already made submissions to the accountants’ society on the exposure drafts dealing with valuation treatment, and last year the institute made a statement advocating the use of independent registered valuers for asset revaluations, suggesting that external valuers be engaged at least every third year to revalue all or part of a portfolio, he says.

It is essential that such reports are independent of company management, staff, or directors, particularly when the “profit” from such revaluations is intended to be carried into a profit and loss account and distributed to share-

holders, Mr Allen says.

The institute would be concerned if a registered valuers’ report is abridged, edited, or altered by the exclusion of accompanying statements or qualifications. In a number of instances it is both essential and desirable that the valuer include some qualifying remarks with the report, he says. On the question of independence, the valuer is entitled to obtain explanations or clarifications from the company’s directors, but is also bound to check the validity of these from other sources where and when available.

As a general principle the institute favours the situation in which little or no qualifications are required to be attached to the report and that the document is complete in its valuation figure and conclusion, Mr Allen says. Some time ago the institute held discussions with the New Zealand Stock Exchange on setting guidelines or standards for the inclusion of registered valuers’ reports in company prospectuses. “The institute would be pleased to learn of any instance of a valuer’s alleged unprofessional performance of duties in this area, including apparent ‘non-independence’, he says.