Mandatories Flashcards
What is GAAP?
Generally accepted accounting principles.
Set standards on the details and legalities of business and corporate accounting. 10 Principles.
Name five of the principles as set out in Generally Accepted Accounting Principles?
Regularity - compliant accountants strictly adhere to established rules and regulations.
Consistency - consistent standards applied throughout the financial reporting process.
Sincerity - GAAP compliant accountants are committed to accuracy and impartiality.
Permanence of Methods - Consistent procedures are used in the preparation of all financial reports.
Utmost good faith - involved parties assumed to be acting honestly.
What’s the difference between GAAP and IFRS?
Generally Accepted Accountancy Principles vs International Financial Reporting Standards
GAAP is rule based
International Financial Reporting Standards is principle based
What is VPGA 1?
Valuation for inclusion in financial statements.
Provides guidance on the valuation of properties and assets for inclusion in financial statements.
What do you consider when interpreting financial accounts of trade related properties?
Balance Sheet - what a company owns, assets and liabilities at a given point in time.
Cash flow - summarises the amount/cash equivalents entering and leaving a company.
Income statement
What is profits and loss?
Shows income and expenditure of a company and the resulting profit or loss.
Helps to monitor P&L.
Compare against past performance and company budgets.
Valuation purposes and to compare against competitors.
Assist in forecasting with future performance
Calculate Tax.
How do you determine net profit?
Sales, less cost of sales
Less SGA (selling, general, admin expenses)
Less depreciation = earnings before interest and taxes (EBIT).
EBIT less interest and tax = profit and loss.
What’s the difference between managed accounts and financial accounts?
Managed accounts are for internal use only and not audited, used for decision making
Financial accounts are audited company accounts required by law.
Have you been involved in a conflict avoidance situation?
A friend owned a coffee shop in Swansea and had been approached by an agent who said they could reduce the RV.
Obviously aware that I worked for the VO, asked if I could look into it for them.
Politely declined and explained it wouldn’t be possible, would conflict with my legal obligation to maintain the rating list on behalf of the VOA. Acting for both would impact upon my impartiality.
How does the VO’s conflict of interest procedure work?
Upon receiving instructions I complete a conflict check to check if both the VO and myself can proceed. This is recorded and stored electronically.
If a conflict is identified this is flagged to my line manager and client is informed.
If I can undertake instruction impartially I will advise client and request informed consent in writing.
If this is received I will proceed.
If I cannot carry out instruction or informed consent is not received I will decline the instruction.
What is the RICS recommendations regarding conflict? Name at least 3
There is a professional statement on conflicts of interest effective January 2018 (released late 2017). 5 key recommendations are:
The Conflict of Interest professional statement prohibits you from proceeding if there is a Conflict of Interest or a significant risk of one unless you obtain prior Informed Consent from all affected parties.
Where a Conflict of Interest or a significant risk of one exists, you should only consider proceeding with the work (and seek Informed Consent in order to proceed) if you are satisfied that all of the relevant clients/parties interests will be served by you doing the work (as opposed to another firm doing it).
Every RICS member must identifty and manage conflicts of interest and keep records of all decisions made.
What are the three types of conflict and what do they involve?
Party conflict- relating to work on the same or related instruction for two different parties.
Own interest conflict- relating to a personal interest.
Confidential Information conflict- relating to work between two parties which is confidential.
What is an information barrier?
Physical and or electronic separation of individuals within the same firm that prevents confidential information passing between them.
What is informed consent?
Consent given willingly by a party who may be affected by a conflict of interest.
What is a conflict of interest?
Where someone in a position of trust or authority has competing personal or professional interests making it difficult
to carry out their duties impartially.
How would you manage an information barrier within the same company?
I could put in place procedures to ensure exclusivity of staff.
I would avoid any cross over of information between departments.
I would ensure that there are separate communication lines to the client.
Separate geographical locations and secure office and data storage.
Confidentially or NDA.
Monitor potential conflict and keep client updated.
What are barriers to effective communication?
Use of jargon.
Language barriers.
Bias.
Interruptions and distractions.
Poor call quality.
Poorly maintained relationships.
How do you communicate effectively in a report relating to a complex issue?
This is dependent on the client and their level of knowledge. I would detail all of the information using plain English without jargon in an concise manner to avoid confusion, using visual aids if suitable.
What method of communication do you use when negotiating with an opposing party?
I mostly use email but have regularly communicate via phone calls, and face-face meetings when needed.
Tell me about a negotiation you have done?
I negotiated a value for Inheritance Tax purposes on a semi-detached property in Forest Hill.
I arrived at a value at the valuation date based upon a range of evidence, I then communicated this to the taxpayer via a formal opinion of value.
I was then contacted by an estate agent who had produced the original valuation.
I reviewed how they arrived at their valuation, and noted the majority of their evidence was based on asking price but not completed transactions. I presented my evidence and reasoning for reaching my value, including the sale of a six bed property two doors down in slightly inferior condition that sold for more than the returned value.
A follow up call was arranged, I explained to the agent why their evidence was not as reliable as mine based on the hierarchy of evidence within the 2019 comparable evidence in real estate document. Agreed a significant uplift, in line with the best comparable as a compromise.
Why is diversity in a team important?
Range of cultures and backgrounds can influence the ideas that can be shared, assist in communicating across different languages, and promotes inclusivity, to inspire future generations to join the industry.
How does the structure in the VOA work?
Within my team we have:
Unit head
Team Leader
Lead Valuers
Valuer – my current level
Assistant valuers
How does partnering and collaborative working affect a team?
Can facilitate new ideas
Increase efficiency
Spread work load
Increase teamwork and unity within team
Can increase quality of work
What is your role in training new staff
Share knowledge, best practice tips, offer advice, make myself available for shadowing, open door policy
What policies do the VOA have to encourage inclusion?
STRIDE mentoring scheme - support those from lower-socio economic backgrounds with networking opportunities and a mentor.
Different coloured desks for neurodiversity.
Building pass scanners low for wheelchair users.
Lifts.
Compliant with Part M of building regulations.
Schools outreach programme.
What is meant by ‘unconscious bias’ and how do you mitigate?
Judgements made without conscious awareness.
Automatic assumptions and stereotypes that influence our perception of a person.
How to mitigate?
Accept it’s a problem and make considered decisions.
Monitor behaviour - avoid assumptions / gut instinct.
Blind recruitment.
Training.
What are the nine protected characteristics under the Equality Act 2010?
- Gender reassignment
- Sex
- Sexuality
- Age
- Disability
- Race
- Religion
- Marriage
- Maternity
Are you aware of why the Equality Act is currently topical?
Supreme court clarified that ‘Sex’ referred to biological sex. Trans women no longer have same rights as women, but retain their rights under ‘Gender reassignment’.
