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2, XIX, 2016
DOI: 10.15240/ ul/001/2016-2-007
Business Adminis a ion and Managemen
In oduc ion
The decision-use ulness heo y (S aubus,
2008) connec s he quali y o he i nancial
in o ma ion disclosed wi h he igh business
decisions made by i s use s, and i is based on
he no ion ha he ele ance and eliabili y o
i nancial epo ing is c ucial, ha ing impo an
p ac ical implica ions. Mo eo e , acco ding
o he basic economic heo y, i is shown ha
high i nancial epo ing quali y is a na u al
ou come o p i a e equi y moni o ing and
go e nance (Beuselinck & Maniga , 2007).
All hese i s ly imply ha he s anda d se e s
de elop quali y accoun ing s anda ds ha a e
accessible o p epa e s, unde s andable and
use ul o in e nal (manage s) and ex e nal
use s o make hei decisions. Secondly, his
implies he co ec use o accoun ing s anda ds
and egula ions and co ec es ima es. The
mos impo an es ima ion in accoun ing is due
o he use o he ai alue concep , a alue
connec ed o he ma ke , which is an al e na i e
o his o ical cos , as he la e was he dominan
alua ion basis up o wo decades ago.
The deba es on he ai alue pa adigm a e
no ecen . They had a g adual e olu ion and
became mo e in ense wi h he awa eness o
he cu en i nancial c isis e ec s. Fai alue
can be analyzed heo e ically and no ma i ely.
In his s udy we ea he no ma i e app oach
o ai alue, namely accoun ing and alua ion
s anda ds. Focusing on he in e na ional e e-
en ial issued by he In e na ional Accoun ing
S anda ds Boa d (IASB), ou esea ch shows
ha he In e na ional Financial Repo ing
S anda ds (IFRS) in ensi y ai alue use,
peaking wi h he issue o IFRS 13 Fai alue
measu emen . This FV accoun ing s anda d
cla i i es he de i ni ion o ai alue, es ablishes
a amewo k o measu emen and equi es
disclosu es abou his measu emen . Es ima-
ions a e done in h ee s ages, wi h a s ic
p e e ence o ma ke -based measu es, ai
alue being an exi alue unde idealized
condi ions (Deaconu & Buiga, 2010).
In e na ional Valua ion S anda ds Council
(IVSC), he p o essional associa ion ha
b ings unde egula ion he ac i i y o asse s
and businesses alua ion a he in e na ional
le el, has i s own amendmen s ega ding
he concep o ai alue. Acco ding o IVSC,
he de i ni ion o ai alue is p esen ed in
he accoun ing s anda ds, as he concep is
gene ally consis en wi h he concep o ma ke
alue. In e na ional Valua ion S anda d (IVS)
300 en i led Valua ions o Financial Repo ing
p esen s he iew o alua ion egula o s in wha
conce ns he alua ion bases in accoun ing and
ai alue es ima es.
S a ing om hese coo dina es and he
in e dependence be ween alua ion p ac ice
o i nancial epo ing and a co ec es ima e o
ai alue, we es ablished as esea ch ques ion
he analysis o he isk inhe en o he p ocess
o alue alloca ion. This is one s age in he
sequence o alue es ima e echniques o an
asse o business and i is implied by he use o
wo classical alua ion app oaches, namely he
ma ke and he income app oaches. These wo
app oaches lead o he es ima e o a global alue
o a g oup o asse s. Howe e , o ecogni ion
in he i nancial s a emen s he alue needs o be
alloca ed o each asse . The alloca ion p ocess
is somewha a i i cial, a leas o a pa o he
asse s in he g oup, as alloca ion keys need o
be used. Usually, hese can be based on alue
es ima es made by alue s o on book alues
which a e no always e alua ed acco ding o
he equi emen s o alua ion s anda ds. The
la e solu ion p esen ed needs o be ea ed
wi h cau ion, and his is wha we will be
ocusing on in ou p esen esea ch, especially
as we discuss a ypical economic con ex s.
Acco ding o (Deaconu & Buiga, 2010) a ypical
VALUE ALLOCATION – CONTRIBUTION AND
RISK TO THE RELIABILITY OF FINANCIAL
REPORTING
Adela Deaconu, So ana C isan, Anu a Buiga
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106 2016, XIX, 2
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ma ke s e e o asse s ha a e no held o sale
o specialized, illiquid ma ke s o non-o dina y
ansac ions, and ma ke s less ac i e speci i c
o eme gen economies. The li e a u e shows
ha he exi p ice and he p emises ega ding
a pe ec ma ke a e no applicable o any
ype o economy (Hi z, 2007; Ronen, 2008;
Whi ing on, 2008).
Focusing on an eme gen con ex , we
conside he ele ance o his o ical cos , which
is some imes used in i nancial epo ing, and
he ele ance o ai alues ob ained by using
a key o alue alloca ion, while conside ing he
case s udy o he Romanian ma ke . P ac ically,
we adop an empi ical app oach in o de o
in es iga e he alue alloca ion p ocess in
wha conce ns ypes o asse s unde alua ion,
alua ion app oaches used, and alue alloca ion
keys used by p o essional alue s. All o hese
enable us o conclude on he ele ance o he
alue alloca ion p ocess o i nancial epo ing,
and hus he eliabili y o ai alue.
The emainde o he pape is o ganized
as ollows: Sec ion 1 explains he esea ch
amewo k, p esen ing e e ence o he i ems
impo an o his esea ch in he li e a u e;
Sec ion 2 p esen s he esea ch design, while
desc ibing he esea ch ques ion and he
cons uc o he empi ical app oach; Sec ion 3
e eals he esul s o he s a is ical analysis;
and he i nal sec ion concludes.
1. Resea ch F amewo k
1.1 Value Alloca ion P ocess
Wi hou going in o de ails ega ding he deba e
on ai alue e sus his o ical cos – deba e
which is s ill ongoing – we only wish o men ion
ha ai alue is cha ac e ized by ele ance
and accoun ing neu ali y (Cas a, Colasse e
al., 2001), while his o ical cos is mo e objec i e
and eliable as he e a e no echnical issues
o i s es ima ion. The pa allel p esen a ion o
he wo concep s unde lines he impo ance
o co ec ai alue es ima ion as his leads
o ano he imagine o he ansac ions and
ac i i ies o a business compa ed o he
adi ional sys em o his o ical cos , o ano he
economic eali y (Ronen, 2008; Ré olle, 2008;
Whi ing on, 2008).
In wha conce ns he e e ence o ai alue
in he accoun ing and alua ion s anda ds,
we s a wi h he accoun ing s anda ds ou
o which IFRS 13 Fai alue measu emen
cla i i es he accoun ing alua ion sys em and
epeals ea lie de i ni ions on his subjec om
a ious IFRS. IFRS 13 de i nes he ai alue o
an asse as he p ice ha would be ecei ed o
sell an asse in an o de ly ansac ion be ween
ma ke pa icipan s a he measu emen da e.
IFRS 13 includes a  ai alue hie a chy which
classi i es measu emen s acco ding o he
na u e o a ailable inpu da a, namely, in he
case o asse s: le el 1 inpu s a e quo ed p ices
(unadjus ed) in ac i e ma ke s o iden ical
asse s ha he en i y own a he measu emen
da e; le el 2 inpu s a e inpu s o he han quo ed
p ices included in le el 1 ha a e obse able
o he asse ei he di ec ly o indi ec ly; le el
3 inpu s a e inpu s unobse able o he asse .
The e a e addi ional accoun ing equi emen s
conce ning measu emen s done using le el
3 inpu s. A alua ion epo is adequa e i i
includes su i cien in o ma ion on he alua ion
inpu s used (especially le el 3 inpu s) o enable
he epo ing en i y o co ec ly ca ego ize
asse s wi hin his hie a chy (IASB, 2013).
Wi hin he alua ion s anda ds, he s anda d
dedica ed o ai alue measu emen , in o he
e ms i nancial epo ing, is IVS 300 Valua ions
o Financial Repo ing. The alua ion s anda d
shows ha IFRS akes on wo models o asse s’
ecogni ion in he i nancial s a emen s: a model
based on cos , en i led basic accoun ing
app oach, and espec i ely a model based
on ai alue which ep esen s he al e na i e
accoun ing app oach admissible in ce ain
pa icula cases. Ma ke alues a e de e mined
when he ai alue app oach is applied.
Acco ding o IVSC (2011), he e e ences o
ma ke pa icipan s, an o de ly ansac ion, he
ansac ion aking place in he p incipal o he
mos ad an ageous ma ke and o he highes
and bes use o an asse make i clea ha ai
alue unde IFRS is consis en wi h he concep
o ma ke alue as de i ned and discussed in he
IVS F amewo k. Acco ding o IVS 300 (IVSC,
2011), when he book alue o an elemen is
based on i s ai alue, and when he alue
o indi idual componen s canno be eliably
de e mined, he ai alue needs o be alloca ed
o each componen . Jus like accoun ing
s anda ds, IVS ecommend ha he alue
alloca ion p ocess should be desc ibed so ha
he logic behind he alloca ion can be ollowed,
and he alloca ion keys should be p esen ed,
and hei usage jus i i ed (IVSC, 2011). In wha
conce ns he alloca ion keys, IVS 300 shows
ha he a io be ween he cos o he elemen
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and he cos o he agg ega ed g oup could be
conside ed an adequa e alloca ion basis.
The h ee adi ional alua ion echniques
o asse s o businesses a e: he ma ke , he
income and he cos app oach espec i ely.
In ela ion o he es ima ion le els men ioned
in he accoun ing s anda ds and in he ligh o
he alue alloca ion p ocess, we could s a e
ha he ma ke app oach is adequa e only
o asse s o businesses ha a e equen ly
subjec o ma ke ansac ions and hus ha e
an ac i e ma ke . I is he only app oach ha
leads o alues which could be classi i ed as
pa o Le el 1 in he ai alue hie a chy, when
hey a e compa ed o iden ical asse s. The
income app oach is applicable when u u e
income/p o i s gene a ed by he asse can be
es ima ed eliably, he o ecas pe iod should
be easonable o hese p edic ions as well as
he capi aliza ion/ discoun a e used o he
o ecas pe iod and he p o i abili y o he asse
discoun ed wi h he isk o ob ain he income.
Es ima es based on he income app oach could
lead o Le el 2 and 3 da a in he alue hie a chy.
The cos app oach is gene ally adequa e in he
case o specialized and/o new asse s, when
ac i e ma ke s canno be iden i i ed. Gene ally,
i s implemen a ion does no incu alloca ion
issues and will lead o es ima es ha all in o
Le el 3 o he ai alue hie a chy.
In wha conce ns he alua ion app oach
chosen, he alues ob ained could belong o an
indi idual asse o o a g oup o asse s. In he
second case he alue is ob ained globally. The
issue o alue alloca ion among he componen s
o he g oup occu s in he case o ma ke and
income app oaches, as he global alue needs
o be di e en ia ed o each asse / p ope y in
o de o disclose i sepa a ely in he accoun s.
F om he s andpoin o alue s he p ocess is
en i led alue alloca ion o componen s. Value
alloca ion is implied by se e al scopes o he
alua ion p ocess. The main one, and he
subjec o ou esea ch, is i nancial epo ing
( e alua ion, goodwill measu emen ), bu in
he alua ion p ac ice he e a e also he cases
o alua ion o ax pu poses, loan colla e als,
insu ance, cases when he ax and i nancial
equi emen s a e di e en o each componen .
As objec s o alue alloca ion, he cases
men ioned in he in e na ional alua ion
s anda ds IVS (IVSC, 2011) a e mainly: land
and buildings ha o m he same p ope y,
se e al buildings (a e he ini ial alloca ion
o land), se e al pieces o equipmen om
a p oduc ion line, capi alized subsequen
expendi u es, acco ding o IAS 16 P ope y,
Plan and Equipmen and IAS 23 Bo owing
Cos s, which need o be alloca ed o di e en
i xed asse s, he alloca ion o he acquisi ion
cos o an en i e business acco ding o IFRS
3 Business Combina ion. The i s h ee cases
o en occu in p ac ice and a e some imes
men ioned in he li e a u e which only e e s o
he di i cul ies o alue alloca ion be ween land
and buildings. One o he majo issues ha
a ise is he possibili y ha a ma ke o buildings
wi hou land does exis , and he second issue
is he di i cul y o sepa a e he wo componen s
(Hend iks, 2005).
The mos equen case o alue alloca ion as
his objec e e s o eal es a e (land + building),
as some imes he land is no subjec o alua ion
(Ma onis & De ango, 1993). As echniques
used by alua ion p o essionals, he li e a u e
ecommends wo deduc i e app oaches om he
es ima ed alue o he eal es a e o med o land
and building (Hend iks, 2005): (a) es ima ing he
ma ke alue o he land wi hou he building
and hen deduc ing his om he ca ying
amoun o he p ope y, and (b) es ima ing he
ne eplacemen cos o he building and hen
deduc ing his om he ca ying amoun o he
p ope y. App oach (a) is also ecommended by
IVS 300 which conside s he esul a ` heo e ical
alue` (`no ional alue`) o he building
(Kucha ska-S asiak & Zelazowski, 2006). The
li e a u e also p esen s a hi d app oach (c) o
alue alloca ion, namely he use o a p opo ional
a io es ablished h ough s a is ical analyses
(Hend iks, 2005). The i s wo app oaches a e
based on he heo y o esidual alue (Hend iks,
2005). The hi d app oach akes in o accoun he
ac ha he wo elemen s con ibu e oge he o
he alue c ea ed.
In he case o eal es a e, he ne
eplacemen cos is he econs uc ion cos
o he g oss eplacemen cos dec eased by
physical impai men and unc ional inadequacy
o he building, some imes e en ex e nal
(economic) inadequacies (Fishman e al., 2007).
The alua ion app oaches ha a e applicable o
any solu ion adop ed o alue alloca ion a e
he cos app oach, which is manda o y, and
espec i ely one o he o he wo app oaches,
namely he income o he ma ke app oach
(Fishe & Len z, 1990; Bel a ge, 2001). The
a gumen behind he use o a leas wo
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108 2016, XIX, 2
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app oaches is achie ing some con ol keys.
Thus, i he alue o he building es ablished
a e he ma ke alue o he land was deduc ed
om he esul o he income app oach o
ma ke app oach is less han he alue o he
building es ablished h ough he cos app oach,
using only wo o ms o impai men (physical
and unc ional), hen in addi ion a hi d o m o
dep ecia ion (ex e nal) will ha e o be applied in
o de o ob ain he alue o he building. I in he
p e ious men ioned case he a io is ice e sa
hen he alue o he building is gi en by he
cos app oach, and he di e ence is conside ed
o be he alue o he land.
A second case o alue alloca ion
men ioned in he IVS, bu insu i cien ly de ailed
in wha conce ns me hodology, and e y poo ly
discussed in he li e a u e is (2) he case o
se e al buildings ha a e subjec o di e en
dep ecia ion echniques and hus ha e o
be ecognized sepa a ely in he i nancial
s a emen s. IVS 300 indica es as a possible
al e na i e he use o a a io sugges ing he
con ibu ion o he i ems o he cos o he
whole. In he Romanian p ac ice, he alua ion
p o essionals eso o one o he ollowing
echniques: (a) a esidual al e na i e ha
implies he measu emen o dis inc alues o
hose i xed asse s (usually he mos impo an )
o which i is possible, and alue alloca ion
based on a key in he case o he o he asse s;
his implies ha he cha ac e is ics and ea u es
o hese asse s a e known; he mos equen ly
used app oach is he ne eplacemen cos ; (b)
an al e na i e ha is based on alue alloca ion
acco ding o a key applied o he whole alue in
o de o ob ain indi idual alues. The alloca ion
key can be de e mined based on ma ke
in o ma ion ans o med in o ne o g oss
eplacemen cos o ne o g oss book alues
(wi h o wi hou deduc ion o dep ecia ion).
The li e a u e on pa icula alua ion cases
such as he cash gene a ion uni s (Fishe &
Kinna d, 1990; Ma d, 2009; Fishe & Kinna d,
2001). The p esen s ye ano he me hod o
alue alloca ion, based on he ma ke alues o
he componen s (as o en as his is possible).
In his case he income is alloca ed o he
componen s acco ding o he pe o mance a io
o he in es men in hose componen s. The
esidual income is de e mined o he esidual
componen , ei he eal es a e o in angible
asse s, as he di e ence be ween he o al
income gene a ed by he cash gene a ing
uni and he income alloca ed o he o he
componen s. A e wa ds, he esidual income
is capi alized by an adequa e a e in o de o
ob ain he alue o he esidual componen .
The li e a u e also men ions ha he
p ocess o alue alloca ion in gene al implies
ho ough p o essional knowledge om he
alue and a he same ime he esponsibili y
o know and apply na ional alua ion s anda ds
on his subjec (Ha pe , 2008). Likewise, o he
egula o y bodies in he i eld o alua ion
( o example he Ame ican egula o y body)
include in hei s anda ds equi emen s o
hei membe s o p o ide in he alue alloca ion
p ocess accu acy and an objec i e opinion
ega ding he alue o he componen s. The
impo ance o he subjec leads o p elimina y
discussions in he alua ion p ac ice be ween
he alue and he audi o o i nancial
s a emen s ega ding a consensus abou he
alua ion app oaches and esidual echniques.
P o essional easoning is ex emely impo an
in he alue alloca ion p ocess as long as he e
is no in ensi e p ac ice o line o easoning ha
can be ollowed.
1.2 Eme gen Ma ke s
Fo eme gen ma ke s in pa icula he e is
a mul i- ie ed alua ion p ac ice and a e y
limi ed a ailabili y o in es men ansac ional
e idence, wi h e ec s on he accu acy o
alua ions (Kucha ska-S asiak & Zelazowski,
2006; Mans i eld & Roys on, 2007). Al hough
in es o s equi e a common denomina o such as
p ope y indices o asse s alua ion and income
p edic ion, he e a e di e ences ega ding public
in o ma ion a ailabili y in a uni a y amewo k
in compa ison o de eloped coun ies. When
i does exis , he in o ma ion is no consis en
and comple e among he alua o s in a low
in o ma ion en i onmen such as he eme gen
one. The his o y o he sale and en ansac ions
is eco ded by eal es a e agen s, such as eal
es a e b oke s and app aisal p ac i ione s who
assemble hei pe sonal da abases, a cen al
da abase de elopmen being a an incipien
s age (Cohen & Galiniene, 2013). Thus, he
ma ke app oach is no applicable o all ypes o
asse s and a e e y gi en ime, as Le els 1 and
2 o he alue hie a chy (ma k- o-ma ke model)
canno be ob ained.
When he ma ke s a e ola ile, such as
eme gen ma ke s o a e a ec ed by economic
c ises, he main app oach sus ainable on he
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long un is based on income (Baumga en,
1978; Fanning e al., 2011; H dý & Šimek,
2012). Howe e , e en his app oach poses
he issue o ob aining he ma ke in o ma ion
necessa y o he assessmen . Likewise,
p o essional easoning becomes e y impo an
when he ma ke s a e unbalanced (including
eme gen ma ke s), and alue s need o be
able o dis inguish be ween in o ma ion ha
will enable a measu emen based on e i cien ,
balanced and s abile da a (Ma d, 2009). This
app oach will lead in gene al o Le el 2 and 3
alues in he ai alue hie a chy. Thus, i he
speci i c ma ke o an asse does no exis o is
no ac i e, e i cien , hen he ai alue will no
be es ablished di ec ly, based on in o ma ion
ha is gene ally desc ibed as objec i e, bu
a he by using alua ion models based on
se e al subjec i e es ima es, less e i i able.
Rega ding le el 3 o measu emen (ma k-
o-model) which conce ns he income o
cos app oach, he isk o alue alloca ion is
connec ed o he income app oach. In o de
o mi iga e his isk, he accu acy o alloca ion
needs o be aken in o conside a ion as well
as he way in which he alue s disclose hei
unde akings. The li e a u e issued a e he
s a o he i nancial c isis insis s on he need o
disclosu es o p o ide some de ails conce ning
he cons uc o ai alue and i s in l uence o e
he esul o he pe iod (Hi z, 2007; Go diene ,
2008). Fo example, in he case o he income
app oach one needs o es ima e: he use ul
li e o he asse , i s esidual alue, he cash
in l ows he asse will gene a e o e ime and
he discoun a e. Es ima es hemsel es a e
subjec i e. In addi ion, in en ional dis o ion o
ce ain me ics can occu . Thus, he alua ion
model implies an inhe en isk, plus ano he
isk connec ed o in en ional manipula ion o
in o ma ion (Géla d, 2002).
We could say ha he Romanian con ex has
been cha ac e ized by in l a ion o he pas wo
decades, wi h a high isk o he his o ical cos
o mo e u he away om eali y. This is also
due o he ac ha some e alua ions we e no
always conduc ed acco ding o he equi emen s
o he alua ion p o ession. O he di i cul ies
conce ning ai alue es ima es a e connec ed
o he income app oach which has been di i cul
o apply gi en he possibili y o o ecas s o be
in alida ed by he e e -changing economic
con ex , and espec i ely o he ma ke app oach
which has been some imes impossible o apply
because o he lack o ansac ions, as shown
abo e. S a is ical echniques o alue alloca ion
based on he his o y o p e ious ansac ions
canno be applied on such a ma ke as a esul
o he lack o anspa ency in wha conce ns he
speci i c e olu ion o he ma ke o di e en ypes
o asse s.
I we we e o p esen he e olu ion o he
Romanian eal es a e ma ke – which is he
subjec o ou analysis – in he las decade
he e a e h ee di e en pe iods. Fi s he e is
he pe iod be ween 2002 and 2007 when p ices
signi i can ly g ew including because o he ac
ha Romania was p epa ing o adhe e o he
Eu opean Union ( he adhe ence ook place in
2007). Then he p ices plunged as a esul o he
economic c isis. A e h ee yea s o powe ul
decline, 2008–2010, in he las pa o 2010 he
eco e y o he eal es a e ma ke s a ed, wi h
posi i e signals o 2011. The sligh eco e y o
he ma ke is sugges ed by he g owing numbe
o ansac ions o all ypes o eal es a e, e en
wi h inc easing p ices. In wha conce ns ou
analysis pe iod, he yea 2013, we could s a e
ha he ma ke is ela i ely s able, and he
ma ke app oach in alua ion can be applied,
e en i no o all ypes o asse s.
2. Resea ch Design
2.1 Resea ch Ques ion
Good alua ions depend upon p ope analysis
and weighing o he ac ual ma ix in any
si ua ion. These a e guided by he p o essional
s anda ds. Then, ce ain cha ac e is ics o
alua ion p ac ice a e de e mined by he
con ex o he asse and he ma ke , along wi h
he p o essional easoning o he alua o . In
ou pape , s a ing om he equi emen s in he
s anda ds, we e i y he p ac ical app oaches
o alue alloca ion, a sugges i e heme o he
eliabili y o alua ions o i nancial epo ing. The
p ocess o alue alloca ion is an in l uen ial ac o
o a eliable and ele an alue, conside ing ha
he use o an inadequa e alloca ion key and/o
an inco ec implemen a ion o he keys could
lead o dis o ed alues o he componen s.
The consequences can be ound in accoun ing
ecogni ion o an asse ha is he subjec o
a di e en e i ciency analysis o in es men s o
hey a e ax ela ed wi h impac on he alue o
p ope y ax and p o i ax, in he case o asse s
subjec o dep ecia ion.
Fo a ypical/eme gen ma ke s he issue
o alue alloca ion is all he mo e impo an
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as ma ke in o ma ion is insu i cien , ew
ansac ions occu , and book alues lose hei
signi i cance due o mone a y dep ecia ion
and ha d o p edic ola ile ma ke s o ce ain
asse s. Thus, he alua ion o each ype o
asse o he ma ke could no be possible,
and so alloca ion keys need o be used. The
alue alloca ion echnique ha uses a a io
es ablished h ough s a is ical analyses
is o be used wi h cau ion because such
con ex s con on wi h he lack o a eliable
da abase which would p o ide his o ical ends
s a is ically alida ed. The comp omise solu ion
would be o use book alues. On he o he
hand book alues canno e l ec he s a e and
iewpoin o he ma ke , co ela ed wi h he
bes possible use iden i i ed o he asse s unde
alua ion. Mo eo e , he use o alloca ion keys
based on accoun ing in o ma ion could lead o
dis o ed esul s, especially i he book alues
ha e been dis o ed by old e alua ions ha
we e inaccu a ely made, o due o di e en
dep ecia ion app oaches used o he asse s
aken in o accoun .
The esea ch ques ion needs o be
co ela ed wi h he Romanian con ex . Fi s ly,
we e i y he deg ee o which ai alue is used
in he Romanian con ex , hus he equency o
alua ions o i nancial epo ing, and om he e
he alue alloca ion. In he Romanian accoun ing
egula ions, issued by he public au ho i y, he
Minis y o Finance (OMPF no 3055 om 2009)
ai alue is explici ly men ioned o e alua ion
o angible asse s and o i nancial ins umen s.
O he e e ences o ai alue a e implici ,
such as he alue de e mined o he non-cash
inc ease o capi al ha has o be es ablished as
a esul o alua ion. Conside ing he alua ion
app oaches pe mi ed by he Romanian
accoun ing legisla ion, he ma ke and alua ion
p o essionals which should de e mine ai alue
a e men ioned in he al e na i e alua ion ules
sec ion. Also, o he alua ion me hods besides
ma ke compa ison a e accep ed i he e is no
enough ma ke in o ma ion. The egula ions
desc ibed a e applicable o all companies and
coexis wi h he egula ion ha en isages he
implemen a ion o IFRS by lis ed companies
o hei consolida ed accoun s, s a ing wi h
Janua y 2007 (OMPF no 1121 om 2006).
Because he use o i nancial ins umen s has
an ex emely slow e olu ion in Romania,
we can conclude ha angible i xed asse s
e alua ion was he mos common case o
ai alue es ima ion explici ly s ipula ed in he
Romanian egula ions. Thus, we will ocus on
a su ey answe s p o ided by he alua o s o
his objec i e o alua ion o i nancial epo ing,
and we will u he discuss he p emises
o e alua ion ope a ions in he Romanian
companies.
A speci i c impo ance has been gi en in
Romania o e alua ion, and he app oach we
a e going o desc ibe can also be ound in o he
coun ies, as he alue es ablished has i scal
conno a ions. Local axes on company eal
es a e a e de e mined as a pe cen age o he
book alue o hose asse s, which may o may
no be e alua ed. The e ec s a e ob ious, bo h
o he i nancial pe o mance and p o i abili y
o he company e l ec ed in he i nancial
s a emen s a e he e alua ion, and o he
income o public au ho i ies.
The legal pe missi e na u e o e alua ions
mani es ed o all i xed asse s such as plan ,
p ope ies and equipmen by he g adual issue
o ce ain no ma i e ac s. These ac s had he
objec i e o adap he elemen s in he i nancial
s a emen s o companies o he economic
en i onmen by he upda e o his o ical cos
and he unimpai ed alue o asse s. We a e
alking abou Go e nmen Decision (GD) no
945/1990, GD no 266/1992, GD no 500/1994,
GD no 983/1998 amended and es a ed by
GD no. 95/1999. These egula ions we e
applicable ei he o all i xed asse s o only o
plan s and p ope ies. The egula ions had
ei he a compulso y na u e ( o he companies
in which he s a e was he majo sha eholde )
o an op ional na u e (as he case o GD no.
983/1998). All o hese e alua ions used he
index upda ing me hod and we e classi i ed in
he li e a u e as adminis a i e e alua ions, as
hey ha e been subjec o c i icism because o
he me hod in which he indexes a e selec ed
and because only one me hod o alua ion is
used. They did no lead o ue ma ke alues,
bu hey did ep esen a i s s ep owa d ma ke
app oach in alua ion. The p ocess o alue
upda e was he esponsibili y o a commi ee
o med by company employees. GD no
403/2000 lea es i xed asse s e alua ion up o
he companies. The di e ence in compa ison o
p e ious e alua ions is ha companies which
conduc ed e alua ions (in he ci cums ances
desc ibed by he GD ega ding he economic
en i onmen , measu ed using he in l a ion
a e) a e able o use o he alua ion me hods
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conside ed adequa e, and can also eso o an
ex e nal p o essional alua o . Concluding, a
his da e, we can alk abou ai alue in he ue
sense o he concep , i he companies ha e
eso ed o au ho ized alua o s ha applied
dedica ed alua ion app oaches, and did no
jus upda e he alue by he in l a ion a e.
The consequence o ou s udy is ha book
alues mus be conside ed wi h p ecau ion in
gene al on he alua ion ma ke , as he e is he
possibili y hey con ain e alua ions ha ha e
no been made acco ding o he equi emen s
o alua ion s anda ds.
In his con ex ou esea ch ocuses on he
way in which alue alloca ion is made. Thus ou
esea ch ques ion is: o wha ex en do alua o s
om eme gen ma ke s apply in hei alua ion
epo s alue alloca ion o componen s, wha a e
he alua ion app oaches mos equen ly used,
and wha a e he alloca ion keys mos o en
used. The use o he ma ke app oach would
educe he isk o he model igge ed by he
o he wo app oaches, he income and he cos
app oach. In wha conce ns he alloca ion keys,
we wan o de e mine i he alue s base hei
opinion on keys ha do no lead o dis o ions in
he i nancial posi ion which a ec he decisions
made by s akeholde s o i nancial si ua ions.
2.2 Ins umen , Sample and S a is ical
Tes s
Conside ing he objec i e o ou esea ch,
he empi ics o he s udy y o cap u e he
pe cep ions o Romanian alue s as p oduce s
o ai alue o i nancial epo ing pu poses.
By using a su ey we es he expe ience o
alua o s and hei app oaches in mo e complex
si ua ions ha imply he use o p o essional
easoning, pa icula ly i hey a e amilia wi h
and apply se e al me hods o alue alloca ion
be ween componen s o i xed asse s wi h
di e en accoun ing ea men s.
In his espec , we designed a sel -
cons uc ed ins umen , o semi-s uc u ed
ype, add essed o he Romanian alua o s
communi y. The su ey con ains in he i s
pa a se ies o suppo ques ions ha a e
designed o ga he in o ma ion on he quali y
and expe ience o he esponden s. These
ques ions ocus on he quali i ca ions and
expe ience wi h alua ions o he esponden s,
hei a i lia ion o p o essional bodies, and he
size o he businesses hey alua ed, which
gi es insigh on he expe ience hey ha e wi h
mo e complex cases. The ins umen was also
designed o in es iga e he elemen s p io o
he alue alloca ion p ocess which ela e o
he na u e o he asse unde alua ion and
he applied me hodology, and espec i ely, o
deepen he p ac ical p ocess o alue alloca ion.
Table 1 sho ly p esen s he in e iew
ins umen , which is de ailed in Appendix 1.
The su ey ins umen was conduc ed online
om Feb ua y 2013 o Ma ch 2013, on a web
pla o m which was a ailable o ou weeks,
while he p oposed in es iga ion was made
public on he o i cial websi e o he Na ional
Associa ion o Romanian Value s (ANEVAR).
ANEVAR also made he in es iga ion public
h ough i s egional cen e s, by e-mailing he
message o i s membe s.
The popula ion s udied is ep esen ed by
alue s, cu en membe s o ANEVAR, which
is also a membe o he in e na ional body
IVSC and he Eu opean o um TEGoVA. We
add essed he membe s who a e enlis ed
wi h an e-mail accoun in he da abase o he
associa ion, ou o he o al numbe o 4,718
exis ing membe s. The numbe o ac i e
membe s ha could ha e answe ed is lowe ,
al hough we do no hold public in o ma ion
ega ding he numbe o inac i e membe s,
which we can only es ima e o 3,200–3,500.
This is he eason why we did no use samples,
Pa s o he ins umen Numbe and ype o i ems
Pa 1 Cha ac e is ics o he ac i i y o alue s
p ac ical expe ience as senio i y and quali i ca ion, espec i ely size and
na u e o he alua ed asse s and ype o alua ion app oaches
3 open-ended ques ions
3 ca ego ical ques ions
Pa 2 Pe cep ions on he p ocess o alue alloca ion
ega ding means o alue alloca ion and keys o alue alloca ion
3 open-ended ques ions
1 ca ego ical ques ion
Sou ce: own
Tab. 1: The su ey ins umen o alue s
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bu he whole da abase o ANEVAR. The ini ial
olume o he sample summed up o 377
alue s. The su eys no i lled ou o a minimum
o 90% we e elimina ed om he analysis.
And hus we eached he i nal sample o 250
subjec s.
In wha conce ns s a is ical es , we used
desc ip i e s a is ics ( equencies), and he
T- es , One-Sample e sion. The T- es is
usually used o he analysis o a sample ou
o a de i ned popula ion in o de o de e mine
i he e a e signi i can di e ences be ween he
di e en analyzed ca ego ies.
3. Analysis Resul s
3.1 Desc ip i e S a is ics
The cha ac e is ics o he alue s’ ac i i y a e
p esen ed below. In wha conce ns quali i ca ion
we no iced an o e specializa ion ega ding eal
es a e and plan & Equipmen . As a esul , we
educed he weigh s o hese specializa ions also
in o de o ha e a s uc u e almos simila o he
s uc u e o he popula ion. In wha conce ns he
equency o alua ions acco ding o he na u e o
he asse , we compa ed he ob ained alues o
he binomials o med by he ca ego ies in o de
o es ablish he connec ion be ween he alues.
Cha ac e is ics
o alue s
P o essional expe ience (yea s)*
Less han 2 yea s
Be ween 2-5 yea s
O e 5 yea s
10%
18%
72%
Quali i ca ion**
Real es a e
Business, in angibles, goodwill
Plan & equipmen
Financial ins umen s
78%
55%
30%
0%
Magni ude
o alua ions
o i nancial
epo ing
pu poses
Weigh in he o al olume o
ac i i ies unde aken*
Less 10 %
Be ween 10 and 25%
Be ween 25 and 40%
O e 40%
24%
35%
20%
21%
F equency o alua ions
o companies wi h pa imony
o di e en sizes***
Consis en pa imony
Medium pa imony
Low pa imony
Insigni i can pa imony
Consis en
–
12%
10%
12%
Medium
47%
–
22%
25%
Low
47%
46%
–
31%
Insigni i can
46%
43%
45%
–
Cha ac e is ics
o he alua ions
acco ding o
he na u e o
he asse s and
he alua ion
app oaches
Ca ego ies o asse s***
Land
Buildings
Plan & equipmen
Land
–
14%
39%
Buildings
65%
–
51%
Plan &
equipmen
17%
9%
–
Valua ion app oaches*
Land
Buildings
Plan & equipmen
Ma ke
93%
27%
37%
Income
6%
34%
8%
Cos
1%
39%
55%
No es: *We used he pe cen age wi hou aking in o conside a ion he non-answe s; **The g oss sample became
a weigh ed sample by ela ing i o he popula ion, in o de o ex apola e he dis ibu ion obse ed o he whole
popula ion; ***The di e ences in equency be ween he ca ego ies wi h bolded alues a e s a is ically signi i can , o
a signi i cance le el ( h eshold) o 95%.
Sou ce: own
Tab. 2: Cha ac e is ics o he alue s’ ac i i y
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In wha conce ns he yea s o expe ience
held by he alue s, compa ed o he senio i y
o he alua ion p o ession in Romania, which
is ins i u ionalized h ough ANEVAR ha
was inco po a ed 20 yea s ago, we conside
ha he ob ained dis ibu ion is ele an o
he alue s in Romania. The obse a ions in
Table 2 also indica e ha he alue s a e mul i-
specialized, and he dominan specializa ion is
eal es a e. A he same ime a conside able
pa o he sample is specialized (also) in
business, in angible and goodwill alua ions,
and mo e han a hi d a e (also) specialized in
plan & equipmen . These i ndings con i m he
compe encies o p o essionals conside ing he
alue alloca ion p ocess ha implies knowledge
o se e al disciplines.
Mo eo e , we no e ha hese p o essionals
a e amilia ized wi h i nancial epo ing alua ion,
as long as o e hal o he sample conduc s his
ype o alua ion be ween 10% and 40% o hei
ac i i y. A u he a gumen o he alida ion
o he sample is he numbe o alua ions o
i nancial epo ing pu poses compa ed o
he size o he pa imony alua ed. Value s
conduc ela i ely o en complex alua ions, o
companies wi h consis en pa imony, al hough
he mos equen alua ions a e conduc ed
o companies wi h low pa imony, and he
equency o he alua ions dec eases as he
size o he pa imony inc eases.
The equency o alua ion epo s
conduc ed o i nancial epo ing pu poses
ollows he succeeding gene al o de : buildings,
land and plan & equipmen . In compa ison o
land alua ions, buildings a e mo e o en he
subjec o alua ions in 65% o he cases, while
he opposi e si ua ion occu s only in 14% o he
cases. A e applying he One-sample T- es
we obse ed ha 51% o he alue s conside
buildings a e mo e o en subjec o alua ion
compa ed o plan & equipmen while 9%
conside he opposi e si ua ion. Fu he mo e,
wi h espec o alua ion app oached applied,
while 93% use he ma ke app oach o land
alua ions, o buildings he ma ke , income and
cos app oaches a e equally used, and o plan
& equipmen he cos and ma ke app oaches
a e mainly used. Wha is use ul o ou u he
analysis is ha alue s ha e mos ly applied
he ma ke and income app oaches, which a e
conside ed global app oaches. This shows,
heo e ically, ha alue alloca ion was applied
in he alua ion epo s o all he h ee ypes
o i xed asse s, hus he p emise o u he
analysis exis s.
3.2 The Analysis o he Value s’
Pe cep ions Rega ding he Value
Alloca ion P ocess
Ou i ndings con i m ha alue alloca ion as
a s age o he alua ion p ocess o i nancial
epo ing pu poses is co ec ly applied in he
Romanian p ac ice. Thus, 98% o he alue s
s a e ha hey deli e he alue o each
componen , a e using one o he alloca ion
op ions. Ou o hese, 64% conduc he alua ion
as a whole and a e wa ds hey alloca e he
alue o he componen s, while 34% es ima e
he alue di ec ly o each componen , and an
insigni i can pe cen age s a e hey lea e he
alue alloca ion a he will o he bene i cia y,
wi hou ge ing in ol ed in his p ocess. We
conclude ha Romanian alue s apply alua ion
s anda ds as hey eso o alue alloca ion i
his is needed, despi e he di i cul ies igge ed
by he a ypical ma ke .
In wha conce ns alue alloca ion be ween
land and buildings, 78% o he answe s
desc ibed he p e e ence o deduc ing he
es ima ed ma ke alue o he land wi hou
he building om he es ima ed alue o
he p ope y. Only 17% o he esponden s
con i med hey use he second al e na i e i.e.
deduc ing he es ima ed ne eplacemen cos
o he building om he o al es ima ed alue
o he p ope y. Wha is in e es ing is ha 5%
o he alue s use o he al e na i es o alue
alloca ion, depending on he p ope y igh s
o he land, he bes possible use o he asse
compa ed o i s cu en use, o he es o
enclosing he esidual alue o he building in o
he es ima ed ne eplacemen cos . We no e he
ocus on ma ke alues and ma ke app oach
(co ela ed wi h he answe s ega ding he
app oach mos ly used, which in he case o land
alua ions is he ma ke app oach), which is
mo e eliable han he cos app oach, and also
he ad anced echnical knowledge o alue s
ha eso o alloca ion echniques.
In wha conce ns alue alloca ion be ween
di e en ypes o buildings, 69% o he
esponden s wi h an opinion on his subjec
s a e hey deduc he alue o he buildings ha
was possible o be es ima ed sepa a ely by
using a classical alua ion app oach, and o
he emaining buildings hey alloca e he es
o he alue by using alloca ion keys. A qua e
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