I have a property on my balance sheet at fair value which the directors estimate. What should I do about valuing it this year?

The fair value of property is generally considered an area that includes high judgement and estimation uncertainty due to its nature.

Due to the economic situation it is possible that assets measured at fair value may be impacted – this includes any property carried at directors’ estimates.

Whilst the frequency of valuations is not prescribed by FRS 102, revaluations must be undertaken with sufficient regularity to ensure that the carrying amount does not materially differ from that which would be determined using fair value at the end of the reporting period. 

The directors may need to review the fair value of any property at the current reporting end date to ensure the values reflect the conditions prevalent at that date. It is anticipated that directors may experience difficulty in knowing how to encompass all relevant factors into the fair value at the balance sheet date and may need to lean on third party experts to obtain such valuations. 

Whilst it is accepted that seeking third party valuations will likely be at a cost to the business, as auditors we are required to gain reasonable assurance that any property held at fair value is not materially misstated (if we are to issue an unmodified opinion), with the best form of such evidence being from independent, expert sources. 

If you have any concerns around the valuation of any property held at fair value at the balance sheet, do ensure you are having these conversations with your auditors in advance to ensure valuations are appropriately obtained.