Use and Enforcement of Valuation Standards in Nigeria
A Thesis Submitted to the School of Postgraduate Studies, University of Lagos
Valuation standards are established recognized and accepted guidelines for best practice in the conduct of professional valuers to ensure reliability, effectiveness, and transparency in their valuation services. This study examined the use and enforcement of valuation standards in Nigeria with a view to developing a framework to guide in valuation best practices. The research adopted a cross sectional survey design. Data were collected through self-administered questionnaires from 203 Estate Surveying and Valuation firms in Lagos, 87 in Abuja, and 48 in Port Harcourt using cluster sampling technique. The results of the survey were complemented with interviews of 18 key officials of relevant professional regulatory bodies and content analysis of 182 valuation reports. The survey achieved a total response rate of 63% in Lagos, 83% in Abuja, and 87% in Port Harcourt; this represents 44% of Estate Surveying and Valuation practice in Nigeria. Statistical tools employed include: frequencies, mean scores, Pearson product moment correlation, stepwise regression analysis, and Analysis of Variance (ANOVA). Based on the grand mean score of 2.25, the results showed that valuers are largely unaware of the operation of valuation standards. A significant variation in level of valuers’ awareness was found. There was greater awareness of International Valuation Standards (IVSC White Book) compared to national standards (NIESV) and British (RICS Red Book) standards. It was found that 26.6% of valuers do not use any valuation standards at all. Among those that are aware and use the standards, 29.3% expressed greater preference for the use of international valuation standards while 24.9% preferred Nigerian standards. Even then, these valuers do not all comply with the minimum reporting content as provided in the standards most especially in critical aspects of valuation such as statement of purpose of valuation; basis of valuations; market and industry analysis; and risk analysis. In addition they do not integrate sustainability considerations in their valuation reports. There was no enforcement measure found being used by the regulatory bodies to ensure compliance with valuation standards. Factors identified that significantly influence use of valuation standards were: lack of awareness; failure to mandate use of valuation standard; valuers lack understanding of how the valuation standard operates; client do not demand use of and compliance with standards; the valuation standard is out of date; absence of effective monitoring; and absence of property data base. Factors majorly influencing enforcement of standards were: inadequate finance; lack of proactive regulatory bodies; and inadequate government policy toward professionalism. A framework to guide the use and enforcement of valuation standards in Nigeria was developed and validated using focus group discussion with professional practitioners and valuers regulatory bodies. The study recommends among other things that valuation regulatory bodies should introduce up-to-date national standards with adequate enforcement mechanisms so as to improve the quality of valuation practice in Nigeria; create more awareness of valuation standards among valuers; incorporate the workings of valuation standards in tertiary school curriculum; and government should come up with policies to support professionalism.