The Financial Reporting Council of Nigeria has announced that the council has assembled relevant professionals to produce valuation regulations for the country.
This was disclosed by The Head of the Directorate of Valuation Standards, at FRC, Ugochukwu Nwora during the Nigerian Institution of Estate Surveyors and Valuers, Valuation Day themed “Importance of Assets Valuation in Financial Stability”, held recently in Lagos, according to The Punch.
He said, “This is following the directive of the Executive Secretary, Dr Rabiu Olowo, that the documents should be out latest July 31, 2024.
“This regulation will be the first of its kind in Nigeria and the council will showcase the exposure draft to the public before launching it in July and the valuation regulations will guide all professional valuers and firms in Nigeria. We encourage professional valuers and firms to commence registration with FRC, especially for those that have not registered.”
Nwora pointed out that to ensure consistency and compliance with asset valuation standards, submissions would be standardised and regulated by the FRC.
He added, “We observe that everybody is just turning in reports and there is no standardisation. Hence, ours is to ensure that there is a reporting council that regulates every work being done and meets the asset valuation standard.
“We intend to get every valuation professional registered, and once this is done, we will not bring down the entire firm if there is any breach. We would identify the person who contravened and take away the FRC number of such a profession, meaning that such a person cannot practice anywhere in Nigeria.
“The FRC valuation regulation should be out before the end of July, and we should be inaugurating it next week. In addition, we are also informing various stakeholders in this regard, so that once the regulation is out, we would roll out the draft so that people can critically look at it.”
Meanwhile, the Chairman of the Nigerian Institution of Estate Surveyors and Valuers, Lagos Chapter, Gbenga Ismail, stated that the event was an advocacy and awareness campaign for the importance of valuation, asset management, and utilisation.
According to Ismail, valuation is the key reason for the Institute’s support to the public and private sectors, adding that the accuracy of the projections needs to be confirmed and validated, and the only way to verify all assumptions is through a proper valuation report.
He said “Valuation refers to the process of determining the worth of a company, asset, investment, or any financial instrument. It is crucial because it helps investors, businesses, and analysts understand the fair value of an asset, which in turn aids in decision-making regarding investments, mergers, acquisitions, and financial strategies. Effective valuation ensures that investments are made at the right price and helps stakeholders assess risk and potential returns accurately.
“Valuation is an everyday term and it is so easy to misplace its intention, recently at our conference. it was referred to as a nice to have.”
However, the Honorary Publicity Secretary of NSEIV, Lagos Branch, Abidemi Ojo said over the years, there has been a disparity in valuation reports.
He stressed, “Disparity in the opinion of value arises from factors, including non-disclosure of property title documents, client influence, inaccurate market data, flawed demand, and supply trend analysis, location attractiveness reports, inappropriate yields and cap rates, and permissible land use and regulations.”
