PurposeThe purpose of this article is to study how fair values in financial reports are audited.Design/methodology/approachThe study is a qualitative case study based on in-depth interviews.FindingsOne important finding is that auditors anchor in the figure presented by the company, and despite the auditing efforts, there is a substantial risk of management bias in the fair values reported. There is a risk for confirmation bias.Research limitations/implicationsRelatively, few respondents were employed in this study, but their background and competence lead to the assessment that the study provides a representative picture of what is being investigated.Practical implicationsAuditors may need to develop ways of performing auditing of fair values to reduce the risks identified in this study.Social implicationsThis study presents a perspective of the auditing process enabling an evaluation of the quality of fair value estimates regarding investment properties in the financial reports. This study also provides users of financial reports as investors, bankers and other institutions with an enhanced understanding of reported estimates of fair (market) values.Originality/valueVery few studies have investigated how auditors evaluate fair values of investment properties. This study contributes by giving users of financial reports an enhanced understanding of the quality of reported estimates of fair (market) values.

Purpose -The purpose of the article is to discuss how the demand for disclosure regarding property valuation in financial reports can be fulfilled. Design/methodology/approach -The starting point is the generally established methods for property valuation and the different types of data that they need. From this it is deduced what kind of information that it is necessary to supply. Findings -An important conclusion from the research reported in this paper is that disclosure regarding applied methods, significant assumptions in property valuations and statements about the connections between appraised values and market evidence needs refinement in financial reports, according to International Financial Reporting Standards (IFRS). As the uncertainty in property valuations cannot be removed, it has to be managed. Providing explicit disclosure about valuations is one important way to manage this issue by reducing the gap of information asymmetry between those who perform valuations and those who are users of financial statements. Practical implications -Providing high quality disclosure on these issues would make analysis and the application of individual judgement by users of financial reports far easier. Findings reported in this paper imply that many companies have not so far found the right balance between cost and benefits regarding what amount of disclosure would be appropriate on this issue in financial reports. Originality/value -The detailed discussion about what information that should be disclosed concerning property valuation is an original contribution of the paper.

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Purpose The purpose of this paper is to discuss how the concepts market value (MV) and exit price should be interpreted in thin markets and how accounting rules may need to change to take this into account. Design/methodology/approach This is a conceptual paper using hypothetical examples as a base for the conclusions. Findings In a thin market, actors can have rather different reservation prices. The price will then be set through bargaining and the agreed price could be considerable above the reservation price of the actor with the second highest reservation price. The exit price should then be below what the MV was before the transaction and below the entry price, and according to the current accounting rules, the value in the balance sheet should then be below the price paid. The authors’ experience is, however, that this rarely happens in practice. Research limitations/implications The limitation of the paper is that it is a conceptual paper and not based a systematic empirical study of accounting practices. Practical implications The results of the paper indicate that there is a need to revise the current accounting rules. Possible changes are discussed. Originality/value As far as the authors know, this is the first paper that looks at problems in the current value concepts related to differences in reservation prices in thin markets.

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