Respuesta :
Valuation refers to the process of determining the economic value of an asset, investment, business, or any other entity. It involves assessing various factors such as market conditions, financial performance, future prospects, and risk factors to arrive at a fair and accurate estimate of the entity's worth.Now, let's discuss the statement "Auditor is not a Valuer, but he is intimately connected with values."An auditor's primary role is to examine and evaluate financial statements and reports to ensure they present a true and fair view of the entity's financial position and performance. While auditors are not typically responsible for determining the value of assets or investments, they play a crucial role in the valuation process in several ways:Verification of Assets and Liabilities: Auditors verify the existence and valuation of assets and liabilities reported in the financial statements. They assess whether the values assigned to assets, such as property, plant, equipment, and investments, are reasonable and supported by appropriate evidence.Assessment of Going Concern Assumption: Auditors evaluate the entity's ability to continue operating as a going concern. This assessment involves considering factors such as cash flow projections, liquidity, and asset impairment, which indirectly impact the entity's valuation.Disclosure of Accounting Policies: Auditors review the entity's accounting policies, including those related to revenue recognition, depreciation, inventory valuation, and impairment testing. These policies can significantly affect the reported values of assets and liabilities.Identification of Impairment: Auditors assess whether there are indicators of impairment for assets such as goodwill, intangible assets, and investments. Impairment testing involves comparing the carrying amount of an asset with its recoverable amount, which requires judgment and estimation.Evaluation of Fair Value Measurements: Auditors scrutinize the entity's use of fair value measurements for financial instruments, derivatives, and other assets or liabilities. They assess the appropriateness of valuation techniques and inputs used in determining fair values.In summary, while auditors are not valuers in the traditional sense, they are closely involved in assessing and validating the values presented in financial statements. Their scrutiny and verification of financial information contribute to the integrity and reliability of the valuation process, enhancing stakeholders' confidence in the reported values of assets, liabilities, and equity.
