June 27, 2022

ICAI News: ICAI issues Concept Paper on All About Fair Value

ICAI issues Concept Paper on All About Fair Value | ICAI News

The Institute of Chartered Accountants of India ( ICAI ) has issued the Concept Paper on All
About Fair Value. 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

Fair value is a common basis of value associated with financial reporting valuations and is
utilized 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 standardize the various principles, practices, and procedures followed by registered valuers/
valuation professionals in the valuation of assets and liabilities, ICAI issued “ICAI Valuation
Standards-2018” which were 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 the ICAI Registered Valuers Organisation (ICAI RVO).

CA. Atul Kumar Gupta, President, ICAI and Director ICAI said “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.”

In this Concept Paper, an analysis of 505 Companies listed on S&P500 in identifying data related
to fair value accounting since the year 1990 has been done along with an Analysis of Fair Value
Impact in Financial Statements of Nifty 50since 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).

The Institute of Chartered Accountants of India and ICAI Registered Valuers Organisation are
committed to providing continued knowledge and support to the Registered Valuers,
Professionals, and other stakeholders.

President, ICAI further added “I am sure the Concept Paper and the empirical research of 505
Companies listed on S&P500 Nifty 50since FY 1989-90 will help the stakeholders and societies
to know more about the trends and findings with regard to fair value.”


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