WASHINGTON, DC (March 4, 2013) – From senior-level practitioners in the financial accounting community to the most tenured experts in the real estate industry, the voice for “change” in the valuation profession has grown from a thought in the minds of many impacted to a deafeningly loud chant.

This was never more evident than late last week, as the International Standards Valuation Council (IVSC) and over 100 professionals gathered in Toronto to discuss and raise the profile of the benefits and potential impact international valuation standards would have on building investor and end-user confidence worldwide.

The IVSC is a private sector organization that supports uniformity and quality of valuations around the world. Established in the early 1980’s to support real estate markets, the IVSC has since expanded to develop standards for all asset and liability categories.

Adding to the level of seriousness valuation holds was the fact that RICS and the other two leading valuation bodies in Canada — the Appraisal Institute of Canada and the Canadian Institute of Chartered Business Valuators — came together for the first-time ever to co-promote this event.

“Canada showed a united profession to the market both in Canada and internationally,” according to Ken Creighton, Director of Professional Standards for RICS.  “The world will benefit from uniting under International Valuation Standards; Canada has taken a substantial move in leading the world in this direction,” he went further to say.

Spearheading this event was Chairman of the International Standards Valuation Council Sir David Tweedie, who delivered a rousing keynote address focused on the critical role that valuation has within a global marketplace.

“We have to speak the same language,” said Sir David, referencing the fact that in many jurisdictions valuation professionals lack a unified identity and often work under various credentials, with none being required to be ranked among the profession.

Sir David, who recently retired as the Chair of the International Accounting Standards Board was a leading proponent behind the adoption of the International Financial Reporting Standards (IFRS).

“Valuation is at the core of economic stability,” Sir David firmly stated. “We may not get a second chance at this. Now is the time to move forward.

Framing the need for unified standards

During his speech at last week’s IVS Conference, Sir David pointed to Australia and Canada as two of the more forward-thinking countries with respect to advancing global valuation standards adoption, but he also noted how the current fragmented nature of the valuation profession has been harmful to other large countries like the U.S.

In his examination of the issue, Sir David cited comments on the subject by U.S. Securities and Exchange Commission (SEC) Chief Accounting Officer Paul Beswick in December 2011.

Beswick, who was deputy chief accountant with the SEC at the time of his comments, said that risks created by the “multiplicity of credentials” in the valuation profession range from innocuous concerns of market confusion to seriously overt concerns of objectivity of the valuator and analytical inconsistency.

“The nature of the profession creates an environment where expectation gaps can exist between valuators, management, and auditors, as well as standard setters and regulators,” he noted.

In offering a way to address the inefficiencies of the valuation profession, Beswick said “one potential solution to consider is whether there should be, similar to other professions, a single set of qualifications with respect to education level and work experience, a continuing education curriculum, standards of practice and ethics, and a code of conduct. One could also contemplate whether a comprehensive inspection program and a fair disciplinary mechanism should be established to encourage proper behavior and enforce the rules of the profession in the public interest.”

During the IVS Conference, Sir David pointed to the significance of the valuation profession, citing how poor valuation practice was identified by the Financial Stability Forum and the G20 as a significant contributor to the 2008 financial crisis.

A power-point slide in the background, as he delivered his keynote address, indicated that the valuation of financial instruments was a particular focus of the financial crisis, where there was inconsistency in valuation between financial institutions as well as across national borders.

“Variation in numbers gathering is too big and we need it shrunk,” said Sir David.

The international financial expert called for convergence in the world of standard setting as the way to move toward international valuation standard recognition and acceptance.

“As standards converge, diversity decreases, resulting in greater consistency of valuations,” according to Sir David. “This begins with the major standards organizations engaging in ongoing dialogue on convergence.”

Conversely, Sir David said those opposed to uniformed global valuation standards point to change, cost and control as the leading factors.

“We don’t need to lower the bar,” Sir David said. “We need to make it as tough as possible and raise the expectation for service providers within the profession.”

“People need to be able to make the best possible decisions with the best possible information,” said Andrew Dorchester, FRICS, principle owner of real estate economics and litigation advisory firm, The Dorchester Group. “A higher level of valuation standards has the ability to distinguish real estate and financial services industries from any other in terms of safety and transparency for the end-user.”

About RICS

RICS is the world’s leading name when it comes to advancing and regulating global professional standards in land, property and construction.

Attaining RICS status is the recognized mark of property professionalism, especially in a world where people, governments, banks and commercial organizations desire greater certainty of professional standards and ethics.

To date, RICS has over 180,000 members in 146 countries, including the U.S., Canada and the Caribbean. Members rank from students interested in real estate careers to senior level professionals, who have established themselves as preeminent figures throughout the many disciplines within the industry.

Headquartered in London, RICS — which was founded in 1868 and granted Royal Charter in 1881 — is committed to setting and upholding the highest standards of excellence and integrity by providing impartial, authoritative advice on key issues affecting businesses and society. RICS regulates both its individual members and firms, allowing it to provide unparalleled client confidence in the sector.