SME and the Valuation Standard

zzq9wVj4_400x400On Tuesday, Nov. 17, the Asia Pacific Economic Cooperation (APEC) kicked-off the Small and Medium Enterprise (SME) Summit 2015, with the theme, “Innovation and Big Ideas: Pushing Boundaries” that aims to challenge the traditional framework and mindset of micro and SMEs to further innovate their businesses.

SME is the engine of growth and innovation in APEC. It comprises over 97 percent of enterprises in the region; over half of the total workforce in APEC member economies; 20 to 50 percent share to GDP; and contributes up to 35 percent of direct exports.

The process of innovation of business requires new mindset and building of credibility of their businesses. The International Valuation Standards Council (IVSC) has recognized this demand and considers it critically important to build valuation expertise and capacity through the application of consistent standards and to continue to develop a globally respected valuation profession to apply these standards with the required vigor and coherence. Having uniform valuation standards in place ensures that the environment in which SMEs operate is fair and encourages healthy competition within and across borders.

The global application of clear valuation standards can benefit SMEs and companies of all sizes in a number of ways. Practitioners, alongside their clients, liaise with a variety of third-party organizations, such as banks, grant funders, and other external parties involved in various transactions. In order to meet their expectations and develop meaningful relationships based on mutual trust, the companies need to demonstrate a high level of credibility. The consistent application of fair value measurement implemented by well-qualified valuation practitioners is an important means for achieving this goal.

All parties involved in the business process should be involve in the education on the importance of valuations standards, which, once applied, help companies to operate in a more accountable and transparent way. As such, valuation standards ultimately can improve companies’ reputation and positioning in the marketplace.

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