Objectivity and conflict of interest are important as the person
conducting the valuation needs to remain objective and do the job
they are asked to do without prejudice. Anyone involved in the
valuation or reporting of businesses needs to not have a conflict of
interest. This element reminds of all the big scandals where business
owners make their company look better than it actually is in financial
statements. The next element using the work of specialists. People
that specialize in an area know the information in a much better way
than the average person does and usually have extensive learning
and research in the topic. Another element is assumptions and
limiting conditions. This makes sense as market values change over
time and some items of valuation do not have an explicit amount tied
to them. It is more a range of possible amounts that depending on
the item's condition, age, public need, etc. all are incorporated into
the price someone may be willing to pay.
All of these elements are standards set in other areas to keep
businesses honest in the reporting of financial statements. It also
helps to create common ground to compare similar companies when
people are looking at investing. Without these standards in place
one company may overvalue themselves while another undervalues.
