Directors’ valuation

Updated: Aug 20, 2021

Sometimes assets in a company’s accounts may be stated to be ‘at directors’ valuation’ or alternatively ‘as certified by managing director‘. The relevance of this description of the value will depend on the circumstances. Generally speaking the directors are responsible for all the figures shown in the balance sheet. Where they are not shown at cost but at valuation, the directors must believe the valuation correct. Where the words ‘at valuation’ are used, there should be an explanatory note stating the method of valuation and whether it was an expert valuation or not. The directors are not necessarily the best persons to value assets. However, the auditors will be expected to verify the valuation and to state whether they consider it to be a fair estimate. Auditors cannot avoid their liability to shareholders by relying on directors’ certificates.

Reference: The Penguin Business Dictionary, 3rd edt.

Sources & references
Risk disclaimer
James Knight
Editor of Education
James is the Editor of Education for Invezz, where he covers topics from across the financial world, from the stock market, to cryptocurrency, to macroeconomic markets.... read more.