PURPOSE: The aim of this study was to examine the validity of the assessment of living skills and resources (ALSAR) and the extent it contributes to and reflects the risk and accomplishment in instrumental activities of daily life for older people. METHOD: The assessment was examined for evidence of construct validity, internal, consistency and effectiveness of the categorical rating schema. Rasch modelling was used to examine the hierarchy of items, item performance and scale quality. RESULTS: A revised 5-level rating schema is proposed whereby skill rating levels are incrementally more at risk when a resource issue is identified. The sample comprised 290 ratings from 160 people 56-101 years (mean 79+/-9). Item mean infit statistics were 0.98 (Z = -0.2, SD = 0.63) and mean outfit statistics 1.02 (Z = -1.0, SD = 0.74). Reliability was 0.89 with a separation index of 2.81. People with long standing severe vision loss display an atypical response pattern denoting the vision item was of low relevance to their total IADL functioning. CONCLUSIONS: This study has further verified the validity of the ALSAR as an IADL outcome measure for use with older people and has offered a more effective refinement of the rating scale. We note the importance of assessing vision prior to IADL testing.