The International Valuation Standards Council (IVSC) has released guidance on the valuation of public sector assets.

The types of assets that are covered by the project includes buildings, structures equipment and land used to provide transport, utilities and social, cultural and recreational services.

Governments and other public sector agencies are finding their finances coming under ever increasing scrutiny. This includes the need to account for the value of assets that are held to provide a public service. While some of these assets are similar to those used for commercial purposes, many are specialised for the service provided, thus creating unique valuation challenges.

Roy Farthing, vice chairman of the IVSC professional board, said: 'To ensure good governance and stewardship of public funds it is important that the value of assets held to provide services to the public is properly recognised, but the specialised nature of many creates challenges, as they are rarely traded in the market. These challenges have led to different approaches being adopted and our aim is to reduce this diversity by identifying and promoting best practice.'

Valuations are required for a wide range of purposes including, but not limited to, financial reporting, internal transfers and for the regulation of pricing by monopolies. According to Roy, there is often confusion as to the valuation criteria, and the extent to which social objectives can or should be reflected in value.

As an example Roy cited, 'a classic case that poses valuation challenges is where a building providing a public service, such as a fire station, is situated on land which potentially could be used for a building of much greater value, but public safety dictates that a fire station is needed in that location.'

Comments are invited before 28 February 2013.