Business Valuation Standards

Business Valuation Standards

At Lotus Amity, all the business valuation reports that we prepare comply with the Australian and International business valuation standards. By complying with the business valuation standards, we ensure that our valuation reports are transparent, comparable and consistent.

Accounting Professional & Ethical Standards (APES)

The Accounting Professional & Ethical Standards Board (APESB) is the independent, national body that sets the code of ethics and professional standards. As members of Chartered Accountants Australia & New Zealand we comply with the ethic and professional standards.

APES 225 Valuation Service is the standard specific to business valuations. APES 225 sets out the professional and ethical obligations in respect to the provision of business valuation services. The standard also defines the types of valuation services, engagement terms and matters to be disclosed in a valuation report. Further, the standard specifies quality management and documentation requirements. APES 225, however, does not set out generally recognised concepts and principles in valuation (See IVSC below).

If a valuation report is prepared in a dispute, such as a commercial or family matter, then we also comply with APES 215 Forensic Accounting Services. APES 215 sets out the types of forensic accounting engagements, such as an expert witness report. The standard also defines independence requirements, our obligations when providing Expert Witness Services and the disclosure requirements.

Other standards that we comply with include APES 110 Code of Ethics for Professional Accountants. APES 110 sets out the fundamental principles of ethics to follow. these principle include integrity, objectivity, professional competence, due care, confidentiality and professional behaviour. Other areas of the code include acting with sufficient expertise and acting independently.

When we provide valuation reports for Court we comply with the relevant Court reporting requirements. These requirements include, the Expert Witness Code of Conduct, the  Uniform Civil Procedure Rules, and the Federal Circuit and Family Court of Australia Rules.

International Valuation Standards

The International Valuation Standards Council is the independent global standard setter for the valuation profession. The council comprises of over 200 organisations, including Chartered Accountants Australia & New Zealand. The international standards are used in over 135 countries.

The purpose of the IVSC is to create robust valuation standards that ensure consistency, transparency and comparability. The standards comprise of seven general standards that apply to all valuations and eight asset standards. Lotus Amity follows both the general standards and the assets standards. The standards that we folllow, include IVS 200 Business and Business Interest, IVS 210 Intangible Assets and IVS 500 Financial Instruments.

There is no mandatory requirement for members of Chartered Accountants & New Zealand to follow the IVS. However, as a matter of integrity and professional competence, at Lotus Amity all our reports comply with the IVS.

Australian Taxation Office (ATO)

The ATO does not set out business valuation standards. However, the ATO does set out guidelines and general expectation on market valuation reports for tax purposes. When preparing reports that may be required by the ATO, Lotus Amity follows the ATO guidelines.

In the ATO guidelines the ATO refer to complying with the IVS. The ATO states that by complying with the professional standards, credibility is added to a valuation report.

Issues that the ATO raise with business valuers include inappropriate methodology and application, lack of appropriate analysis and scrutiny of inputs, unreasonable and incorrect assumptions, and omitted, inconsistent or insufficient evidence. We consider all these issues when we prepare our reports. These issues are also checked for in our quality review process.