IVSC Proposes IVS 107 Quality Controls Standard for Private Credit Valuations (Effective Jan 2028)
The International Valuation Standards Council (IVSC) has published an Exposure Draft proposing significant revisions to the International Valuation Standards (IVS), with a headline measure being the introduction of a new General Standard: IVS 107 Quality Controls. Proposed to take effect from 31 January 2028, the changes respond directly to a series of high-profile write-downs in private credit portfolios that have raised hard questions about how illiquid, market-absent assets are valued, documented, and reported. For accounting firms, auditors, and CFOs who rely on third-party valuations in financial statements, the direction of travel is clear: process discipline and documented governance are becoming non-negotiable expectations under the global valuation framework.
Why the IVSC Is Acting Now
The private credit write-down problem
Private credit markets lack the observable pricing signals available in liquid public markets. When borrower performance deteriorates or credit conditions tighten, valuations built on limited or non-observable inputs may not capture those changes promptly. The IVSC notes in its Exposure Draft that this lag is not an inherent defect in valuation methodology, but a process risk: the quality of the outcome depends heavily on the rigour of the process behind it.
Recent write-down events across private credit portfolios have made that risk visible at scale. Investors, regulators, and auditors have been left asking not just whether a number is right, but whether they can understand how it was reached. The proposed IVS revisions are the IVSC's answer to that concern.
Relevance to digital and crypto asset financial statements
The IVSC framing is sector-agnostic. The same valuation-risk pressures that afflict private credit apply wherever fair value must be estimated from limited market data. Digital assets held in institutional portfolios, crypto assets measured under IFRS or US GAAP, and tokenised credit instruments all share one characteristic: valuers and preparers must justify their inputs, assumptions, and model choices to auditors and regulators. As standard-setters including the IASB and FASB continue refining guidance on crypto financial statements and fair value hierarchies, IVS quality-control expectations will increasingly inform how those valuations are substantiated.
IVS 107 Quality Controls: What the Proposed Standard Covers
Moving quality control from implicit to explicit
The IVSC's core argument is that quality control has until now been an assumed discipline rather than a codified one. IVS 107 is designed to change that. It establishes structured requirements around how valuation risk is identified, mitigated, and documented throughout the valuation process, not just at the point of sign-off.
Specifically, the proposed standard calls for documented procedures that demonstrate how significant judgements, material assumptions, and model choices have been tested and supported. This shifts the evidential burden: a valuation report is no longer sufficient if it simply states a conclusion. The process that produced that conclusion must itself be auditable.
What this means for valuation governance frameworks
For accounting firms reviewing valuations used in financial statements, and for CFOs overseeing reporting processes, IVS 107 will raise the minimum baseline for what constitutes acceptable valuation documentation. Internal valuation functions and external valuation providers alike will need to demonstrate:
- Clearly recorded justifications for key assumptions
- Evidence that model choices have been challenged and validated
- A traceable governance trail from inputs through to reported value
This is especially relevant for firms operating across multiple jurisdictions, where the absence of a single observable market price is the norm rather than the exception. The IVS framework is explicitly designed to be globally applicable, which means IVS 107, if adopted, will set a cross-border baseline that feeds directly into audit procedures and financial reporting reviews.
Targeted Revisions Across the General Standards
Data quality and professional scepticism
Alongside the new IVS 107 chapter, the Exposure Draft contains targeted revisions to existing General Standards. One set of changes places sharper emphasis on the quality, relevance, and provenance of the data used in a valuation. This includes direct attention to management-provided or client-supplied information, a particularly pointed issue in private credit where borrower-reported financials may be the primary input.
The revised language reinforces professional scepticism as an active obligation: valuers must document not just that they received data, but how they evaluated it. For auditors reviewing valuations embedded in crypto financial statements or alternative asset portfolios, this aligns with existing audit standards on the use of specialists and the assessment of management estimates.
Model governance and technology tools
A second area of revision addresses the use of models, including those supported by automated tools or advanced analytical technology. The IVSC is not discouraging innovation here. Efficiency and consistency gains from technology are acknowledged. The point is narrower: professional judgement remains the responsibility of the qualified valuer, not the model or the platform producing the output.
This principle has a direct read-across to digital asset accounting software environments, where automated pricing feeds, on-chain data sources, and algorithmic valuation tools are increasingly embedded in reporting workflows. The IVS position is that those tools are inputs to professional judgement, not substitutes for it. Firms using digital asset accounting software to generate fair value estimates for crypto financial statements should document the human review and challenge layer sitting above the automated output.
The same logic applies to the due-diligence standards increasingly expected of firms using third-party data providers, as explored in the context of blockchain analytics data quality due-diligence questions.
Disclosure improvements for valuation users
A third strand of revision targets transparency for the people relying on valuations: investors, auditors, lenders, and regulators. The proposed changes encourage more explicit disclosure of significant assumptions, the involvement of specialists or third-party service organisations, and, where relevant, the extent to which non-transparent or proprietary technology tools have been used.
For firms preparing crypto financial statements under IFRS or US GAAP, this maps onto existing disclosure requirements around fair value measurement. The IVS direction reinforces what FASB ASC 350-60 and IFRS 13 already require: users of financial statements need enough information to understand the judgements embedded in a reported figure, not just the figure itself.
Consultation Timeline and Next Steps for Firms
How to engage with the Exposure Draft
The IVSC is actively seeking responses from valuers, investors, auditors, regulators, and other stakeholders. The proposed effective date of 31 January 2028 means there is a meaningful window for firms to review the proposals, assess the gap between current practice and the proposed requirements, and contribute to the consultation before the standard is finalised.
Firms active in private credit, financial reporting, investment governance, or digital asset valuation are specifically identified by the IVSC as relevant respondents. The quality of the final standard will reflect the breadth of that engagement.
Practical preparation for accounting and audit teams
January 2028 may appear distant, but valuation governance frameworks take time to build. Accounting firms advising clients who hold illiquid assets, private debt instruments, or digital assets at fair value should begin mapping current valuation documentation practices against the IVS 107 framework now. The questions to ask include: Is the process behind each valuation as auditable as the conclusion? Are model choices documented and challenged? Is client-supplied data subject to explicit scepticism procedures?
Professional standards development at the IVSC connects to the broader global effort to raise the quality of financial reporting infrastructure, an effort also visible in recent updates such as the IFAC 2026 International Education Standards Handbook. Preparing now, rather than at the adoption deadline, is the lower-risk path.
FAQ: IVSC IVS 107 Quality Controls and Private Credit Valuation
What is IVS 107 and when does it take effect?
IVS 107 Quality Controls is a proposed new General Standard within the International Valuation Standards, included in the IVSC's current Exposure Draft. If adopted as proposed, it would take effect from 31 January 2028. It codifies quality control as an explicit, structured requirement rather than an assumed professional discipline.
Does IVS 107 apply to digital asset valuations?
IVS is a principles-based, globally applicable framework that is not limited to any single asset class. The governance and documentation requirements proposed under IVS 107 are relevant wherever professional valuations are prepared from limited or non-observable market inputs, which includes digital assets, tokenised instruments, and crypto assets held at fair value in financial statements.
How does the revised data quality guidance affect auditors?
Auditors reviewing valuations used in financial statements will be able to expect, under the revised IVS, that valuers have explicitly documented how management-provided or client-supplied data was assessed. This provides a clearer basis for audit procedures and challenge, particularly for assets where borrower or issuer data is a primary valuation input.
What is the relationship between IVS 107 and IFRS or US GAAP fair value requirements?
IVS operates alongside, rather than replacing, IFRS 13 and FASB ASC 350-60. The IVS framework governs the professional valuation process; IFRS and US GAAP govern how fair values are recognised and disclosed in financial statements. IVS 107 would reinforce the process rigour that underpins the inputs feeding into those accounting measurements.
Does the model governance revision mean firms cannot use automated valuation tools?
No. The IVSC Exposure Draft acknowledges that technology and automated tools can improve efficiency and consistency. The proposed standard makes clear that professional judgement remains the valuer's responsibility. Firms using automated or algorithmic inputs must document the human review and challenge layer that sits above those outputs.