Global BV standards, education in the spotlight in Toronto

BVWireIssue #145-5
October 29, 2014

BVWire was on the scene in Toronto, Canada, last week as international BV players gathered for significant discussions on global valuation standards and education.

Landmark MOU: During its annual general meeting, the International Valuation Standards Council (IVSC) announced the signing of what they call a landmark memorandum of understanding (MOU) designed to boost confidence in the valuation process. The MOU, signed by some of the world’s largest valuation professional organizations (VPOs), represents a commitment to comply with a single global set of standards for valuing assets. The organizations have committed to comply with the IVSC standards within the next three years. Among the groups that have signed the MOU are the American Society of Appraisers (ASA), Canadian Institute of Chartered Business Valuators (CICBV), China Appraisal Society, and the Royal Institution of Chartered Surveyors (RICS).

“Variation of international standards for valuing assets represents a potential problem for global markets and economies, and it has to be in the public interest to bring the various nationally based standards together to create a single set of globally accepted principles,” Sir David Tweedie, chairman of the IVSC Trustees, said in a statement. “This is a landmark achievement and represents a major step towards getting global adoption of international valuation standards,”

Education debate: Following the IVSC meeting, this editor moderated a panel discussion on global BV education that was webcast live (recording available free if you click here). “The question is not what we should do, but what is the right thing to do,” said Mary Jane Andrews, chair of the International Institute of Business Valuators (IIBV).

“There’s a global warming of the BV profession toward the ideas of valuation standards and education, and we need to be ready to respond to them,”said Bob Morrison, chair of the ASA Business Valuation Discipline Committee. “CICBV members are already asking for an international education and certification,” countered Pierre Maillet, who is with PwC in Montreal and is on the CICBV board. He warns that it takes years to develop these things, so the route is to support country-specific standards via the VPOs rather than a new international organization.

“Young people in our profession need a certification that’s global, portable, and recognized,” agreed Doug McPhee, global head of BV education at KPMG. “Otherwise, they’re struggling to align their training with their careers or with the regulators.” To prepare individuals as the profession changes, you need “entry education, continuing education, minimum work experience, standards probably around the IVS from the IVSC, and you need disciplinary procedures,” Maille says. Ben Elder, global director of valuation at RICS, points out that his organization takes a proactive approach to discipline by scrutinizing its members’ work and taking enforcement action where it sees fit.

“If external trends move faster than internal actions, you’re on the road to disaster,” says April Mackenzie, COO of the IVSC, quoting a business leader she’d heard earlier. “Education is what you have at a point in time, but competency is an ongoing commitment over time. What we need to do is find a way to recognize the right levels of competency. That’s where we have to start for the answer.”

The panelists agreed that, generally speaking, education should be standardized internationally. “But at the national level, and at the level of practicing internationally, you need to demonstrate an additional international competency,” said Morrison. “What good is the market approach in a local economy with no secondary market? Knowing that is a key part of international competency.” One route is for the IVSC to weigh in on whether VPOs meet the minimum standards of an international body for common, high standards.

While it’s unclear what tangible actions will be taken in the short term, it’s important to keep this dialogue going in order to move forward with a global unification of the BV profession.

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