TOPIC:  VALUATION OF COMPANY ASSETS IN NIGERIA

BY: ESV OMOTOYOSI FADIPE

The decision by various business organizations, mostly profit making ones to determine their current financial state, company’s portfolio, and investment standing at any particular period as in recent times become increasingly important and pertinent.

It is therefore of great importance that utmost Professionalism in Asset Valuation is adopted before, during and after this undertaken, especially where it involves publication of financial analysis and disclosure of additional information with respect to these asset holdings. It is also note worthy that the process of company assets valuation is not without its own challenges and problems but also embedded with prospects.

Estate Surveyors and Valuers are saddled with the responsibility to carry out valuation of landed properties on behalf of their clients by virtue of the Decree 24 of 1975, which established the Estate Surveyors and Valuers Registration Board.

Valuation can be defined as “the art or science of estimating the value for a specific purpose of a particular interest in property at  a particular moment in time ,taking into consideration all the features of the property  and also taking into account all the underlying economic factors of the market including the range of alternative investments” This subject matter is not limited to real property(Land and Building),it includes chattels such as plant and machinery ,motor vehicles, furniture and fittings, computers etc which is referred to as fixed assets  in companies or institutions.

In recent years in Nigeria, the eligibility and competence of estate surveyors and valuers in valuation of assets has been challenged by accountants and engineers .One fact stands out in the midst of these professional arguments  that an Estate surveyor and Valuer by  virtue of their training, exposure and legal instrument are best equipped to carry out assets valuation.

As earlier stated, assets could be valued for a number of reasons. In most cases, valuation is required for mortgage purposes, company financial statements, privatization and commercialization compensation liquidation, receivership, and also to meet stock exchange requirements, amongst others.

The purpose for which assets valuation may be required nowadays is boundless. The purpose for which a valuation is required determines the basis as well as the method to be employed. In carrying out asset valuation, it requires intelligence, competence, experience and technical skills on the part of the estate surveyor and valuer. These attributes are essential qualities of the valuer because in most cases, the recommendation emanating from assets valuation reports most times form the bedrock of action by the stakeholders or corporate bodies decisions taken on such recommendations may have far reaching financial and legal implications.

The term asset valuation as it is generally accepted are those valuations that concerns fixed assets that are shown in financial statements. Financial statements relate to company accounts, statement required by the stock exchange and receivership and so on. Fixed assets of a company could be defined as those assets which are intended for use on a continuing basis for the purpose of the company’s activities in the production of goods and services.

Assets can be divided into three categories namely:

1. Tangible Assets-assets in this class include the following:

    i. Land and Buildings
    ii. Tools and Equipments
    iii. Plant and Machinery
    iv. Motor Vehicles
    v. Furniture and Fittings

2. Intangible Assets-which comprise the following:

    i. Cost of research and development
    ii. Patents, licences and trade marks
    iii. Good Will

3. Financial assets-this include the followings:

    i. Investments
    ii. Own shares
    iii. Loans to third party
    v. Shares in affiliates

The nature and age of an organization largely determine the quality, quantity and type of its fixed and moveable assets
                    
PROSPECTS OF ASSET VALUATION FOR ESTATA SURVEYORS & VALUERS

AWARENESS OF THE PROFESSIONAL CALLING OF    ESTATE SURVEYORS AND VALUERS

With increase in successful completion of assets valuation assignments by estate surveyors and valuers, the public will be aware of the professional calling of the estate surveyors and valuers and the warfare between engineers and estate surveyors and valuers could be laid to rest

INCREASE IN PATRONAGE

Clients’ patronage would be increased where assets valuations are carried out for companies, as companies see it as a means of benchmarking or as a barometer with which to measure their progress

Estate surveyor and valuers in so doing will have more briefs at hand to execute

BETTER QUALITY OF PROFESSIONAL SERVICES

With an increased number of assets valuation assignment carried out by estate surveyors and valuers, professional estate surveyors and valuers are encouraged to sharpen their skills to be able to deliver quality professional services to their clients

ACQUISITION OF ASSETS VALUATION SKILLS BY PUPIL    SURVEYORS IN TRAINING

Increased volume of assets valuation work implies increased number of participation in the assets valuation exercise by pupil surveyors in training .This will in no small measure help the pupil surveyors in training to have a complete acquisition and mastery of the skills and principles of assets valuation.

Assets Valuation though fraught with problems, in modern day company’s business is all embracing, encompassing and infact unquestionably inevitable in crucial decision making.

As a matter of fact, assets valuation is indispensable to companies.