A markets and valuation concept defining how assets are priced and assessed using cash flows, risk measures, or relative benchmarks. It governs estimation of value, required return, and sensitivity to rate or spread changes across asset classes. It does not guarantee accuracy and depends on input quality, market liquidity, and the suitability of benchmarks and assumptions. It supports investment decisions and reporting by providing structured methods to quantify value and risk exposure. The concept is generally stable, though market structure and valuation conventions evolve over time.

Principle

Provide a transparent, auditable record that communicates how a value was derived, enabling users to assess reasonableness and replicate results if needed.

Demonstration

A quarterly Valuation Report for an illiquid private-equity position shows the selected discount rate, comparable transactions used, a reconciliation to the general ledger carrying amount, sensitivity tables, and the valuation committee's approval note.

Misapplication

Issuing a report that omits material assumptions, uses outdated input sources, or lacks evidence of review, which misleads users about the reliability of the value.

Consequence

A complete report supports audit readiness, informs management decisions, and provides regulators and stakeholders with the rationale behind reported values.

Reversal

A reversal is informal verbal communication of values without a documented report, leaving no traceable basis for the estimate and increasing dispute risk.

Boundary

Covers communication of a valuation instance and its supporting evidence; it does not include the operational tools or dashboards used to monitor valuation program health.

Semantic Tension

There is tension between concise executive summaries for decision-makers and exhaustive technical annexes for auditors; the report must balance both audiences.

Synthesis

A Valuation Report consolidates methods, data, assumptions, validations, and approvals into a single artifact that explains and defends the stated value.