What is the existing use value basis of valuation and does it remain fit for purpose?

Abstract

This paper debates the application of existing use value (EUV) as a valuation basis for use in financial reporting of UK public sector operational assets and questions whether it remains fit for its original purpose in an International Financial Reporting Standards (IFRS)-dominated reporting environment. The RICS has launched a guidance project in this area in response to stakeholder feedback alluding to inconsistencies in the interpretation of the EUV principles among valuers and auditors. In view of these issues arising, the author questions the continued use of EUV and considers whether it should be abandoned altogether as a valuation basis. He goes on to consider alternative valuation bases for valuing specialised assets in the public sector such as a fair/market value approach, historic cost, and current operational value, currently being developed by the International Public Sector Accounting Standards Board (IPSASB).