Financial reporting in India has undergone a significant transformation owing to the adoption of Indian Accounting Standards (Ind AS) and fair value is the guiding principle in financial reporting across the globe. The Institute of Chartered Accountants of India (ICAI) converged accounting standards with IFRSs and accordingly, the financial statements beginning from the accounting year 2016-17 started disclosing financial figures based on fair value measurement. Fair value is a common basis of value associated with financial reporting valuations and is utilised throughout the Indian Accounting Standards.
It is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the valuation date.
To standardise the various principles, practices and procedures followed by registered valuers/ valuation professionals in valuation of assets and liabilities, the Institute of Chartered Accountants of India has issued “ICAI Valuation Standards-2018” which have been formulated on the basis of “Fair Value principles” as per Ind AS 113 as notified by the Ministry of Corporate Affairs. ICAI Valuation Standards, 2018 have been adopted by ICAI Registered Valuers Organisation.
Looking at the importance of the concept of fair value and its various aspects, it was thought to bring out a Concept Paper on “All about Fair Value” highlighting various Key aspects of Fair Value as per Ind AS 113, Consideration for determination of value based on highest and best use, where the highest and best use is different from the existing use, factors influencing Fair Value and Relevance of Exit Price in Fair Value. Apart from this, the Concept Paper captures the Analysis of Application of Fair Value Accounting in S&P 500 Companies and an Analysis of Fair Value Impact in Financial Statements of Nifty 50 since FY 1989-90.
This Concept Paper will help the registered valuers, other stakeholders to convey more clearly that fair value is a market-based measurement, and not an entity-specific measurement, and that fair value reflects current market conditions (which reflect market participants’, not the entity’s, current expectations about future market conditions).
We at the Institute of Chartered Accountants of India and ICAI Registered Valuers Organisation are committed to provide continued knowledge and support to the Registered Valuers, Professionals and other stakeholders.
I am sure the Concept Paper and the empirical research of 505 Companies listed on S&P 500 Nifty 50 since FY 1989-90 will help the stakeholders and societies to know more about the trends and findings with regard to fair value.
For referring to the Concept Paper, please click here.
With Best regards,
CA. Atul Kumar Gupta
President ICAI and Director ICAI RVO