Valuation for the purposes of IFRS

Preparation of financial statements in accordance with the International Financial Reporting Standards (IFRS) is a complicated and labor-intensive process. It requires well-coordinated work of high-qualified experts in the field of accounting, methodology and international standards, and also appraisers, since one of the IFRS requirements is to record some assets and liabilities at fair value.

In most cases, for the purposes of preparation of financial statements under IFRS, companies request services of independent appraisers. Over 20 years, FinExpertiza has been providing valuation services to Russian and international clients.

In the rating of RAEX, FinExpertiza is regularly in the ТОP-10 of the biggest valuation groups on the Russian market.

The range of our valuation services encompasses all stages of IFRS introduction: from the first-time adoption to regular revaluations of certain types of asserts in accordance with the IFRS requirements. We offer the following services to firms which are planning to adopt IFRS or are already applying these standards:

• •  Valuation of noncurrent assets at fair value as of the date of transition to IFRS. Most frequently, firms use the opportunity to valuate noncurrent assets at fair value as of the date of transition to IFRS and use this value as the historical cost for this date (in accordance with IFRS (IAS) 1 "Presentation of Financial Statements").
• •  Valuation of investment property (IFRS (IAS) 40) – land or buildings held to earn rentals or for capital appreciation. This valuation is carried out annually as of the reporting date.
• •  Impairment testing of noncurrent assets (IFRS (IAS) 36). The procedure seeks to ensure that an entity's assets are not carried at more than their recoverable amount. Impairment indicators may be internal (production downtime etc.), and external (economic situation in the country, legislative changes, growth of market interest rates etc.). Professional appraisers of FinExpertiza take into account all details and determine whether your assets will generate economic benefits in the future, or whether their value decreased in comparison to the value recorded in financial documents.
• •  Valuation for the purpose of business combinations (IFRS) 3). If your company has obtained control of a business, our experts will help to properly record all assets and liabilities, as well as goodwill (measure goodwill) at the acquisition date for subsequent inclusion of data on the acquired entity in the consolidated report.
• •  Valuation of financial instruments at fair value (IFRS) 9). Such instruments may include securities, receivables, loans, various contracts (deposit agreements, bank account agreements, surety agreements, bank guarantee agreements, leasing, factoring), futures, options etc.
• •  Valuation of actuarial assets and liabilities (IFRS (IAS) 19), which includes determination of total costs of all social obligations to employees with regard to remuneration and pension plans. As a rule, such liabilities are fixed in collective agreements and agreements with nongovernment pension funds, and may significantly affect future income and financial stability of a firm.

It is important to note that valuation must be reviewed and confirmed by an auditor. Owing to the many years’ practice of carrying out valuation for the purposes of IFRS, we have gained considerable experience of interacting with most big audit firms, so the procedure will not cause any difficulties. FinExpertiza experts will ensure to support this procedure.