IVS 101: Defining the Scope of Work in Family Law Valuations

When a relationship breaks down and a family law property settlement begins, one of the most contested issues is often the value of a business. For many families, a business represents a significant portion of the marital asset pool. If the valuation is unclear, incomplete, or poorly documented, it can quickly become a source of dispute between the parties.

This is where professional valuation standards become critically important. One of the most important international standards guiding valuation engagements is IVS 101: Scope of Work. This standard ensures that the terms, purpose, and boundaries of a valuation are clearly defined before any valuation work begins.

In family law matters, this clarity can prevent misunderstandings, reduce disputes, and ensure the court receives reliable and transparent valuation evidence.

What Is IVS 101?

IVS 101 is part of the International Valuation Standards (IVS) framework and focuses specifically on defining the scope of work for a valuation engagement.

The scope of work essentially sets the rules for the valuation. It defines what is being valued, why the valuation is being undertaken, who will rely on the valuation, and how the valuation will be performed.

Under IVS 101, the valuer and the client must agree on the scope of work before the valuation is completed. This ensures the engagement is appropriate for the intended use and that everyone involved understands the purpose and limitations of the valuation.

A properly documented scope of work typically identifies key elements such as:

• The asset or business interest being valued

• The client and intended users of the valuation

• The purpose of the valuation

• The valuation date

• The currency used

• The basis of value applied

• The assumptions relied upon

• The information sources used by the valuer

  
  

These elements form the foundation of a credible and defensible valuation.

Why Scope of Work Is Critical in Family Law Valuations

In family law disputes, business valuations are often scrutinised by lawyers, opposing experts, and ultimately the court.

Without a clearly defined scope of work, several problems can arise:

1. Disagreement about what is being valued

Is the valuation for the entire company, a minority shareholding, or a specific asset within the business?

2. Confusion about the purpose of the valuation

A valuation prepared for tax purposes may produce a different outcome compared with one prepared for family law litigation.

3. Disputes over assumptions and information

If the assumptions used by the valuer are not clearly documented, the valuation may be challenged.

IVS 101 helps prevent these issues by requiring that the scope of work be clearly agreed between the valuer and the client before the valuation is undertaken.

This clarity improves transparency and helps ensure the valuation is suitable for court proceedings.

How IVS 101 Improves Valuation Reliability

Family law valuations often rely on information provided by business owners, management, accountants, and external experts. The reliability of this information can significantly affect the final valuation outcome.

IVS 101 requires valuers to clearly document the nature and sources of the information they rely upon and any assumptions made where information is limited.

This transparency is critical in litigation settings. If a valuation is challenged, the court can see:

• What information was relied upon

• What assumptions were made

• Whether any limitations affected the valuation

  
  

By clearly documenting these factors, the valuation becomes far more robust and defensible.

The Role of Forensic Accountants

Business valuations used in family law matters must withstand intense scrutiny. Courts expect valuations to be independent, objective, and prepared in accordance with recognised professional standards.

This is where forensic accountants play a crucial role.

At DB Forensic, our team specialises in preparing business valuations that comply with international valuation standards, including IVS 101. We work closely with family lawyers and clients to ensure that:

• The scope of work is clearly defined

• The valuation purpose aligns with family law requirements

• All assumptions and inputs are properly documented

• The valuation report is clear, transparent, and defensible in court

  
  

By following recognised valuation standards, we help ensure that business valuations provide reliable evidence that supports fair and informed property settlements.

Need a Reliable Business Valuation for a Family Law Matter?

Business interests can be one of the most complex assets to value in a property settlement. Ensuring the valuation follows recognised standards like IVS 101 can make a significant difference in the outcome of a dispute.

If you are involved in a family law matter and require a professional business valuation, the team at DB Forensic can help provide clear, independent financial analysis.

Discuss Your Business Valuation