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Valuation - A new area of practice

Venkat Raj , Last updated: 04 January 2021  

Valuation - A new domain for Chartered accountant

The Companies Act 2013 has specifically envisaged a concept of valuation for which a section is even in force. Section 247 of the Companies Act 2013 deals with the role of a registered valuer.

A chartered accountant in practice shall not charge fees on a percentage basis of contingency or happening or not happening of the event except in circumstances as may be permitted by the council. In the revised code of ethics, 2020 as against valuation service fees can be charged as a percentage of asset realized/liabilities discharged which is further enhanced through regulation 190A. Even under the revised code of ethics, a Registered valuer is a permissible designation to be used by a chartered accountant in practice (section 7 of the Chartered Accountant Act 1949).

For section 247 ICAI made several representations on this issue. This section got approval only by 2018 in a clear manner. When the act was formulated vide Companies Amendment Act 2017 the valuation could be done only by a graduate (even though being a Chartered accountant). But ICAI has very rightfully acted by telling the course is available after class 12 (now even class 10 for foundation) thereby graduation is not mandatory to do this course. Some CAs (last 5 yrs) have not obtained graduation degree but still, qualification is highly relevant through various MRA (mutual recognition agreement) and various other license agreement. Thereby MCA had to accept the same representation in a dignified manner

While companies act 2013 largely focuses on corporate social responsibility, corporate governance, the valuation was introduced in section 247 which mandates valuation for companies by a registered valuer.

For companies that are mandatory to constitute an Audit committee under section 177 of the companies act 2013 audit committee has the power to appoint the registered valuer after considering the qualification. For the companies which are not required to constitute the audit committee, the board of directors has the power to appoint the registered valuer. A valuer shall not hold pecuniary interest in the company in any form.

Valuation - A new area of practice

Significance of valuation

In the year 2020 which saw a global pandemic of covid 19 across the globe and also in the UK a new virus developed at the end of the year which saw many businesses undergoing difficulty valuation plays a key domain. Business underwent paradigm shift more virtual meetings. Virtuality became a reality

In the current business environment, a balance sheet consists of more intangible assets rather than tangible assets. Thereby valuation is key. ICAI through its valuation standards board has prepared valuation standards. The ICAI has resumed its role through its non-standing committee and a valuation standard board has set valuation standards that are benchmarked with International valuation standards. These standards are made mandatory from 2018 By adopting valuation standards Valuation reports reveal the true picture of the business. It will describe feasibility, viability, of business.


Apart from that ICAI RVO (section 8 company) has undertaken a mammoth task. ICAI also conducts certificate courses for its members.

Apart from that IND AS 113 Fair value measurement also lays down valuation principles. It describes the market-based approach, Principle-based approach. This standard can be well applied.


Valuation is a good niche area for practice. Ideal area for youngsters to practice as it is innovative and requires a full understanding of quantitative principles and business understanding in different domains. By becoming a chartered accountant and getting experience in big audit firms or undergoing a certification course can be ideal to explore valuation. Moreover, industries like tourism, travel, hotel, have substantially declined thereby valuation would be handy.

A chartered accountant in practice more particularly youngsters have a huge domain to play in


The following areas

  • Valuation
  • Forensic audit
  • GST
  • International taxation
  • International financial reporting standard

As I conclude I also inform you that the above-mentioned areas of practice have no jurisdiction.

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Published by

Venkat Raj
Category Corporate Law   Report



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