SAEE International Valuation Standards 3 — Questions and Answers
Question 1: Which IVS general standard covers the requirements for valuation reports?
- IVS 103 Reporting (Correct answer)
- IVS 101 Scope of Work
- IVS 102 Investigations and Compliance
- IVS 104 Bases of Value
Correct answer: IVS 103 Reporting
IVS 103 sets out the requirements for communicating the valuation in a report.
Question 2: The cost approach is generally most appropriate for which type of asset?
- Specialized assets with no active market (Correct answer)
- Listed equity shares
- Frequently traded commodities
- Government bonds
Correct answer: Specialized assets with no active market
The cost approach suits specialized assets where market or income evidence is limited.
Question 3: Under IVS, 'Fair Value' as defined by IFRS differs from market value mainly because it is defined by which framework?
- Financial reporting standards (IFRS 13) (Correct answer)
- Tax legislation
- Insurance regulation
- Banking capital rules
Correct answer: Financial reporting standards (IFRS 13)
IFRS fair value is an accounting concept defined under IFRS 13 for financial reporting purposes.
Question 4: What does IVS require when a valuer relies on information provided by the client?
- Disclose the source and consider its reliability (Correct answer)
- Accept it without comment
- Discard it entirely
- Republish it as the valuer's own data
Correct answer: Disclose the source and consider its reliability
IVS requires valuers to identify the source and assess whether reliance is reasonable.
Question 5: Which concept describes the most likely use of an asset that is physically possible, legally permissible, and financially feasible?
- Highest and best use (Correct answer)
- Salvage value
- Going concern
- Liquidation value
Correct answer: Highest and best use
Highest and best use reflects the use that maximizes an asset's value within those constraints.
Question 6: Under IVS, what must a valuer disclose if departing from a standard?
- The departure and the reasons for it (Correct answer)
- Nothing, departures are routine
- Only the client's name
- The fee charged
Correct answer: The departure and the reasons for it
Any departure from IVS must be transparently disclosed with justification.
Question 7: Which of the following best describes 'Investment Value' under IVS?
- Value to a particular owner for specified objectives (Correct answer)
- The value to the general market
- The cost to insure the asset
- The forced sale value
Correct answer: Value to a particular owner for specified objectives
Investment value reflects the worth of an asset to a specific owner given their goals.
SAEE International Valuation Standards 3
Which IVS general standard covers the requirements for valuation reports?