Note · 2026-10-08

What does an auditor expect from a review of a valuation report?

An auditor uses a review as audit evidence about an accounting estimate. The auditor needs to know whether the methods, significant assumptions and data are appropriate in the context of the applicable financial reporting framework. A review under Ukraine’s National Valuation Standard No. 1 (NVS 1) answers a related but different question: whether the report complies with the requirements of the regulations on property valuation and whether it can be used for its stated purpose. It is therefore worth agreeing the scope of a review for audit purposes before work starts.

Source: NVS 1, para. 67.

Who’s who

A valuer whose report the entity used in preparing its financial statements is a management’s expert. To the extent necessary, having regard to the significance of that expert’s work for the auditor’s purposes, the auditor shall evaluate the expert’s competence, capabilities and objectivity, obtain an understanding of the work, and evaluate its appropriateness as audit evidence for the relevant assertion.

Source: ISA 500, paras 5(e) and 8.

A reviewer engaged by the auditor, whose work the auditor uses, is an auditor’s expert. The auditor evaluates that expert’s competence, capabilities and objectivity as well; for an external expert, this includes inquiry about interests and relationships that may threaten the expert’s objectivity.

Source: ISA 620, paras 6 and 9.

An NVS 1 review supplies part of this information itself. It sets out the qualifications of the report’s authors and a conclusion on their right to carry out the valuation, and the reviewer must have no personal financial or other interest in the outcome of the valuation.

Source: NVS 1, paras 63 and 65.

What the auditor looks for in the reviewer’s work

The auditor evaluates the adequacy of the expert’s work for the auditor’s purposes, including:

• the relevance and reasonableness of the expert’s findings or conclusions, and their consistency with other audit evidence;
• if the expert’s work involves significant assumptions and methods, their relevance and reasonableness in the circumstances;
• if it involves source data significant to that work, the relevance, completeness and accuracy of that data.

Source: ISA 620, para. 12.

When the auditor tests how management made the accounting estimate, the same three elements are tested: methods, significant assumptions and data. Each is considered in the context of the applicable financial reporting framework (for fair value under IFRS, that is IFRS 13). The auditor also addresses whether management has taken appropriate steps to understand estimation uncertainty and to address it by selecting an appropriate point estimate and developing related disclosures. Where the auditor uses the work of a management’s expert, these requirements may assist in evaluating that work as audit evidence.

Source: ISA 540 (Revised), paras 18, 22⁠–⁠26 and 30.

What a review under NVS 1 provides

A review under NVS 1 sets out conclusions on whether the choice of the basis of value is justified, on the source data, on the application of valuation approaches and the reasonableness of assumptions, together with an overall conclusion on the reliability of the valuation. The report is placed in one of four categories, from “fully complies with the requirements of the regulations on property valuation” to “does not comply … and cannot be used”.

Source: NVS 1, paras 65 and 67.

Three differences to plan for

The benchmark. The review tests the report against the regulations on property valuation; the auditor tests the estimate in the context of the applicable financial reporting framework. For valuations used in accounting, NVS 1 has its own rule: the fair value of an asset equals its market value where that can be determined under the national standards, and for specialised property, special-purpose property or property of special construction it equals depreciated replacement (reproduction) cost. A “fully complies” classification therefore does not, on its own, tell the auditor whether the basis of value and the assumptions meet IFRS 13.

Source: NVS 1, paras 33 and 67; ISA 540 (Revised), paras 23⁠–⁠25.

No conclusion of value. A review must not contain the reviewer’s own conclusion of value; any opinion of value in monetary terms can be given only in a full valuation report. If the auditor wants a point estimate or range from the valuer, the work is no longer a review but a valuation with its own report.

Source: NVS 1, para. 64; Law No. 2658-III, Article 13; ISA 540 (Revised), paras 28⁠–⁠29.

Events after the valuation report date. During a review, the reviewer must not take into account additional information about the subject property or similar property that emerged after the date of the valuation report. The auditor may obtain evidence from events up to the date of the auditor’s report. The auditor shall then evaluate whether that evidence is sufficient and appropriate, taking into account that changes in circumstances between the event and the measurement date may affect its relevance. For fair value, information after the period-end may not reflect conditions at the balance sheet date.

Source: NVS 1, para. 66; ISA 540 (Revised), paras 18(a), 21 and A92.

What to agree before work starts

The auditor shall agree with the expert, in writing when appropriate, the nature, scope and objectives of the work; the respective roles and responsibilities of the auditor and the expert; the nature, timing and extent of communication, including the form of any report; and the need to observe confidentiality requirements.

Source: ISA 620, para. 11.

If the entity rather than the auditor commissions the review, there may be no such agreement between the auditor and the reviewer. It is then worth setting out the scope in the written request for the review, which is the legal basis for carrying it out.

Source: Law No. 2658-III, Article 13; NVS 1, para. 62.

In practice, it is worth recording in the engagement letter or request for the review:

• whose report is under review, its valuation date, and which basis of value the applicable financial reporting framework requires;
• which significant assumptions and data the auditor wants examined separately;
• the form of the output: a review under NVS 1 with a separate section for the auditor on methods, assumptions, data and sensitivity (without monetary figures of the reviewer’s own);
• whether the auditor needs a point estimate or range from the valuer; if so, that is a separate valuation report;
• confidentiality requirements.