Threats to the Objectivity of a Valuer

OBJECTIVITY 

Objectivity is one of the Ethical principal for the Valuer.

Others are integrity, competency, Confidentiality and Professional Behaviour

The quality or character of being objective:

Lack of favoritism toward one side or another

Freedom from being biased.

Objectivity:

• Objectivity is the state of mind which has regard to all considerations relevant to the task in hand but no other.
• It describes as “Independence of Mind”
• Objectivity is essential for any professional person exercising professional judgment
  

Threats to the Objectivity:

Following are the probable treats to the objectivity:

The Self Interest Treat:

A threat to the valuer’s objectivity comes from a financial or other self-interest conflict.  For Example: This could arise from a direct or indirect interest in a client or from a fear of losing a client.

The Advocacy Treat:

There is a threat to the valuer’s objectivity, if he becomes an advocate for (or against) his client’s position for any adversial proceedings or situations. Whenever a valuer takes a strong proactive stance on the client’s behalf, this may appear to be incompatible with the special objectivity that value requires.

The Trust or Familiarity Threat 

A Threat that the valuer may become over-influenced by the personality or the qualities or the directors or management and consequently too   sympathetic to their interest. Alternatively the valuer may become too trusting of management representations so as to be inadequately rigorous in his testing of them – because he knows the client is too well, or the issue too well or for some similar reason.

The Intimidation Threat:

The possibility that the valuer may become intimidated by threat, by dominating personality, or by other pressures, actual or feared, by a director or manager of the client or by some other party.

Each of the above threats may arise either in relation to the valuer’s own person or in relation to the connected person such as a family member of his family or a partner or a person who is close to him for some other reasons, such as past or present association or obligation or indebtedness.

Keeping in mind the objectivity as the ethical principal for the Valuer’s , valuer should avoid the above situations.