6 hours Ago By James Agberebi
The Financial Reporting Council of Nigeria (FRC) is seeking an increase in transparency, integrity and standardisation in valuation practice as part of the desire to improve financial reporting. The Executive Secretary and Chief Executive Officer of the Council, Dr Rabiu Olowo, hinted at the aspiration Olowo at the Stakeholders’ Engagement on the Proposed Valuation for Financial Reporting Regulation held in Lagos at the weekend. Olowo explained that the stakeholders’ engagement was to provide an opportunity for dialogue, collaboration and shared perspectives on issues bordering transparency, accountability and integrity of financial reporting.
“Financial reporting is the cornerstone of trust in our markets and economy. The quality, reliability and accuracy of financial statements directly impact investors, businesses, regulators and the broader public. “Today, we are discussing an aspect of financial reporting that plays a crucial role in the valuation of assets and liabilities – an area that directly influences financial decisions, economic policies, and market behaviour,” he said.
Olowo notes that standardisation of valuation practice would provide clear guidelines on how valuation should be conducted to ensure consistency in the approach used by different professionals and institutions while reducing the possibility of ambiguity and subjective interpretation. He noted: “The proposed regulations require that the methods and assumptions used in valuations be disclosed. This level of transparency is essential to ensure that stakeholders have a clear understanding of how values were derived and the underlying assumptions.
“By outlining the roles and responsibilities of valuers, auditors and other key stakeholders, the regulations aim to improve the accountability of those involved in the valuation process. This will foster a culture of accuracy and integrity in financial reporting. He stated that the regulations align with international best practices and standards, which are vital for ensuring that the financial markets remain competitive, credible and attractive to investors.
“Clear and objective valuation standards help minimise the risks of errors, conflicts of interest and disputes that can arise from inconsistent valuation practices,” he noted. According to him, valuation is not merely an exercise of assigning a monetary value to assets or liabilities but a key process that requires rigorous methods, a deep understanding of markets and adherence to defined standards. He said: “The proposed valuation regulations are designed to address the need for consistency, clarity and reliability in the valuation process, ensuring that financial statements reflect the true financial position and performance of an entity.
“The accuracy of these valuations is vital, as financial reporting influences key decisions, from the allocation of resources to investment strategies, mergers and acquisitions, regulatory compliance and tax assessments,” he stressed..
