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USAID / Financial Market Reform Project in Romania Valuation Standards and the Reform of the Capital Market By Dennis Grubb Senior Capital Markets Adviser.

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Presentation on theme: "USAID / Financial Market Reform Project in Romania Valuation Standards and the Reform of the Capital Market By Dennis Grubb Senior Capital Markets Adviser."— Presentation transcript:

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2 USAID / Financial Market Reform Project in Romania Valuation Standards and the Reform of the Capital Market By Dennis Grubb Senior Capital Markets Adviser

3 USAID / Financial Market Reform Project in Romania FMR Project The project is implemented on behalf of USAID under technical assistance contract with Deloitte Touche Emerging Markets (USA) The beneficiary institutions include: CNVM Bucharest Stock Exchange, Rasdaq Electronic Exchange Investment Funds Association Senate Sub-Committee on Capital Markets Romanian Shareholders Association APAPS Others The project’s work will expand and strengthen the financial sector as well as support greater transparency and accountability in public and private institutions

4 USAID / Financial Market Reform Project in Romania The USAID Romania’s strategic objective: To create a FINANCIAL SECTOR that is:  Competitive  Efficient  Transparent  Market responsive  High level of integrity

5 USAID / Financial Market Reform Project in Romania FMR’s mission is to ensure that: Issuers disclose sufficient and accurate information for investors The value of an issuer’s assets must be included so that investors can determine the appropriate investment price

6 USAID / Financial Market Reform Project in Romania Past versus Present In the old days The asset value shown in the financial statements were mainly based on a historical cost basis In fact The more relevant information is how much is the asset worth today, not its purchase price from some years ago

7 USAID / Financial Market Reform Project in Romania The concept of current value of assets The concept of current value of assets became more apparent in the newer accounting standards including the standard on impairment of assets Therefore Appraisers are increasingly important and closely linked to the financial markets, accountants and securities regulators

8 USAID / Financial Market Reform Project in Romania The concept of “fair” value To record the historical asset purchase price is easy But to estimate or determine its “fair” value or value for future use is difficult and requires comprehensive skills and knowledge

9 USAID / Financial Market Reform Project in Romania Appraisal Methodology: THE PROCESS for determining asset value must be credible, justifiable and transparent This is more important than several appraisers reaching a single asset price

10 USAID / Financial Market Reform Project in Romania International Valuation Standards IVS has enhanced its reputation and credibility by continually issuing new and improved ethics, competency, practical and disclosure standards Enforcement of these standards is equally important Without sufficient enforcement, the written rules are almost meaningless


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