Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

EHAPC > PE Valuation - Red Book > Flashcards

PE Valuation - Red Book Flashcards

1
Q

Are the UK sections of the Red Book issued separately to the global sections?

A

Yes

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

When was the UK Red Book last updated?

A

With effect from 14 January 2019

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

When was the Red Book Global last updated?

A

31 January 2022

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

What is the full title of the Red Book?

A

RICS Valuation - Global Standards

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

What were key changes to the last Red Book update?

A

IVS changes incoporated

Articulating in more detail the need for clear, unambigious and documented terms of engagement when members apply and exceptions to VPS 1-5 under PS1 section 5, Exceptions

More detailed commentary on matters relating to sustainability/resilience and environmental. Social and governance (ESG)

Improving and/or clarifying some of the existing Red Book Global text in light of feedback, experience and evolving needs

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

What does IVS stand for?

A

International Valuation Standards

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Which sections of the global Red Book are mandatory?

A

PS 1-2
VPS 1-5

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

What does PS1 relate to?

A

Compliance with standards where a written valuation is provided

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

What does the Red Book apply to?

A

Written valuation advice

AVM-derived output

Oral valuation advice (to the fullest extent possible)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

What are excepted valuations under PS1?

A

> Agency or brokerage advice (not a purchase report)

> Acting as an expert witness

> Statutory functions

> Internal purposes

> In the course of negotiations/litigation

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Which section(s) of the Red Book do excepted valuations not have to comply with?

A

VPS 1-5

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Can an external valuer provide an internal purposes valuation?

A

Yes

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

What does PS2 relate to?

A

Ethics, competency, objectivity and disclosures

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

What needs to be satisfied in order to be competent to provide a valuation?

A

> Appropriate academic/professional qualifications, demonstrating technical competence

> Member of a professional body, demonstrating a commitment to ethical standards

> Sufficient current local, national and international (as appropriate) knowledge of the asset type and its particular market, and the skills and understanding necessary

> Compliance with any country or state legal regulations governing the right to practise valuation

> Where applicable, compliance with the RICS Valuer Registration (VR) requirements

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

If you decide to provide preliminary advice or a draft valuation report, what should you state in writing?

A

> That your opinion is provisional and subject to completion of the final report
That your advice is provided for the client’s internal purposes only
That any draft is on no account to be published or disclosed

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

What type of valuations may be relied upon by a third party?

A
  • Published financial statement
  • Stock exchange, or similar body
  • Publication, prospectus or circular
  • Investment schemes
  • Takeovers or merges
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

If you have previously valued an asset for any purpose, what additional disclosures must you make?

A
  • Relationship with the client and previous involvement
  • Rotation policy
  • Time as signatory
  • Proportion of fees
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

If your firm is too small to have a rotation policy or valuation panel, what else could you do to ensure objectivity?

A

7 yearly (or less) review by another member

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

Could a conflict of interest exist if you or your firm have been involved with the asset (i.e. purchase or valuation) during the last 12 months?

A

Yes

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

In relation to the proportion of fees additional disclosure, what would a significant amount be considered as?

A

5-25%

21
Q

What does VPS 1 relate to?

A

Terms of engagement (scope of work)

22
Q

Do your terms of engagement have to be in writing?

A

Yes

23
Q

Can the valuation date be different to the report date?

A

Yes

24
Q

Can you provide a restricted valuation service?

A

Yes - if it is reasonable with regard to the purpose and subject to appropriate conditions

25
Q

What is an assumption?

A

Something that is reasonable to accept as fact without specific investigation or verification

26
Q

What is a special assumption?

A

Something that assumes facts that differ from the actual facts existing at the valuation date or that would not be made by a typical market participant in a transaction on the valuation date

27
Q

What does VPS 2 relate to?

A

Inspections, investigations and records

28
Q

How can you deal with limitations or restrictions on inspection, inquiry or analysis?

A

Record them in your terms of engagement and report

29
Q

Can you revalue a property without reinspecting it?

A

Yes - but only if there are no material changes to the physical attributes or location

30
Q

What does VPS 3 relate to?

A

Valuation reports

31
Q

What is an internal valuer?

A

A valuer ho is in the employ of either the enterprise that owns the assets, or the accounting firm responsible for preparing the enterprises’s financial records and/or reports

32
Q

What should you do if market conditions change between the valuation date and date of the report?

A

Comment that values change over time

Draw attention to this

33
Q

What does VPS 4 relate to?

A

Bases of value, assumptions and special assumptions

34
Q

What are the bases of value recognised under the Red Book (not wider IVS)?

A

Market value

Market rent

Investment value (worth)

Fair value

35
Q

What is market value?

A

The estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm’s length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion

36
Q

Should you reflect special value (from a special purchaser, not a general market expectation) or marriage value in market value?

A

No

37
Q

What is Market Rent?

A

The estimated amount for which an interest in real property should be leased on the valuation date between a willing lessor and a willing lessee on appropriate lease terms in an arm’s length transaction, after proper marketing and where parties had each acted knowledgeably, prudently and without compulsion

38
Q

What is investment value (worth)?

A

The value of an asset to a particular owner or prospective owner for individual investment or operational objectives

39
Q

What is fair value?

A

The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date

40
Q

Where does the fair value definition come from?

A

IFRS 13

41
Q

Is there generally any difference between market value and fair value?

A

No

42
Q

When would fair value generally be used?

A

Financial statement valuations

43
Q

Can you refer to forced sale value?

A

No

44
Q

What does VPS 5 relate to?

A

Valuation approaches and methods

45
Q

What is the cost approach?

A

Based on the economic principle that a purchaser will pay no more for an aset than the cost to obtain one of equal utility whether by purchase or construction

46
Q

What is the market approach?

A

Based on comparing the subject asset with identical or similar assets (or liabilities) for which price information is available, such as a comparison with market transactions in the same, or closely similar, type of asset (or liability) within an appropriate time horizon

47
Q

What is the income approach?

A

Based on capitalisation or convesation of present and predicted income (cash flows), which may take a number of different forms, to produce a single current capital value

48
Q

How do RICS regulate valuation work?

A

Valuer Registration Scheme (VRS)

49
Q

Do you have to pay to become a Registered Valuer?

A

Yes

EHAPC (41 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions