Brainscape's Knowledge GenomeTM

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


See full index

APC 2024 > Red Book > Flashcards

Red Book Flashcards

1
Q

What is the Red Book?

A

The Red Book contains mandatory rules, best practice guidance and related commentary for all members undertaking valuation work across the globe.

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

Who can carry out Red Book Valuations?

A

Registered valuers under the Valuer Registration Scheme.

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

What are the sections of the Red Book?

A

Introduction
Glossary
PS - Professional Standards
VPS - Valuation Technical and Performance Standards
VPGA - Valuation Practice Guidance Applications
International Valuation Standards

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

What is the purpose of the Red Book?

A

Achieving consistency, objectivity and transparency to sustain public confidence and trust in valuation

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

What are professional standards in a valuation context?

A

they are centred on ethics and conduct, underpinned by knowledge and competence

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

What are technical standards ?

A

they are centred on common definitions and conventions, underpinned by consistent application through recognised approaches

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

What are performance or delivery standards?

A

centred on rigour in analysis and objectivity of judgement, backed by appropriate documentation and clarity when reporting

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

Is the Red Book mandatory?

A

Yes, it contains mandatory obligations regarding competence, objectivity, transparency and performance

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

What are the Professional Standards set out in the Red Book/

A

PS1 - Compliance with standards where a written valuation is provided.
PS2 - Ethics, Competence, Objectivity and Disclosures

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

Are the professional standards mandatory?

A

Yes, for all written valuations

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

Are VPSs mandatory?

A

Yes, but there are some exceptions listed in PS1 including:
- valuations given in an agency capacity
- expert witness
- performing statutory functions
- valuations for internal purposes without liability or third party reliance
- in preparation for negotiations

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

What does PS2 set out/

A
  • Members’ ethical obligations, including responsibility to comply with RICS Rules of Conduct
  • Ensuring that valuations are carried out by competent individuals with necessary expertise
  • Compliance with conflicts of interest professional standard
  • disclosures that must be made by valuers, including their relationship with the client and any previous involvement in the asset(s) being valued
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Which sections of the Red Book are mandatory?

A

Professional Standards
Valuation Technical and Performance Standards
International Valuation Standards

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

Are you still liable for valuation advice that’s provided orally?

A

Professional Standards should still be adhered to.

Just because it’s oral, doesn’t mean its provided without liability.

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

What are the Valuation Technical and Performance Standards?

A

VPS 1 - Terms of Engagement (scope of work)
VPS 2 - Inspections, investigations and records
VPS 3 - Valuation reports
VPS 4 - Bases of value, assumptions and special assumptions
VPS 5 - Valuation approaches and methods.

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

VPS 1 - What is included with your standard Terms of Engagement?

A

ID & Status of Valuer
ID of Client
ID of other users
The property
Currency
Purpose of valuation
Basis of Valuation
Valuation date
Nature and source of information to be relied upon
All assumptions and special assumptions
Format of the report
Restrictions on use
Confirmation that it will be undertaken in accordance with IVS.
Fee
Firm registration and CHP
Compliance
PII Caps

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

VPS 2 - why must valuers inspect?

A

To verify the necessary information being relied upon for a valuation to ensure the information is professionally adequate for its purpose.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

VPS 2 - are desktop reports Red Book compliant?

A

Yes - unless for one of the exemptions.

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

VPS 2 - What factors must a valuer consider when undertaking a desk-top valuation?

A

Must be agreed in writing in the Terms of Engagement
Must disclose possible valuation implications in writing
Must consider whether it is reasonable with regard to the purpose of valuation
Must refer to the restriction in the report.

20
Q

VPS 2 - can you conduct a re-valuation of a property and not inspect?

A

only if you’re satisfied that there have been no material changes to the property or the nature of its location since the previous report.
Must confirm this in the terms of engagement.

21
Q

What is VPS 3 of the Red Book?

A

relates to what should be included in valuation reports

22
Q

VPS 3 - can you give preliminary (draft) valuation advice?

A

Yes, however it must be:

marked as a draft, subject to completion of the final report
marked for internal purposes only
stated that it cannot be relied upon and can’t be published.

23
Q

VPS 3 - can you discuss the valuation report with the client prior to issuing?

A

Yes you can, however, you must not be influenced by the client in any way.

Any information given by the client in the discussion, must be stated within the report

24
Q

What VPS 4?

A

Relates to bases of value, assumptions and special assumptions

25
Q

VPS 4 - Define an assumption?

A

An assumption is where it is reasonable for the valuer to accept that something is true without the need for specific investigation.

e.g. on the assumption that there is no contamination.

26
Q

VPS 4 - Define a special assumption?

A

A special assumption is a supposition that is taken to be true and accepted as fact, even though it is not true.

e.g. special assumption of vacant possession

27
Q

What are the principle bases of value?

A

Market value; market rent; fair value; investment value

28
Q

VPS 4 - Define 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.

29
Q

VPS 4 - Define 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 the parties had each acted knowledgeably, prudently and without compulsion.

30
Q

VPS 4 - Define 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.

31
Q

VPS 4 - Define Investment Value?

A

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

32
Q

What is vps5 ?

A

Valuation Approaches and Methods

33
Q

VPS 5 - what are the three valuation approaches?

A

Income Approach (Investment, Residual & Profits)
Cost (DRC)
Market (comparable)

34
Q

What is VPGA 1 of the Red Book?

A

a
Valuation for inclusion in financial accounts.

Fair value will be adopted for all IFRS adopted accounts.

Prescribed “performance standards” must be adhered to.

35
Q

what is VPGA 4?

A

Valuation of individual trade related properties

36
Q

VPGA 4 - what is adjusted net profit?

A

the valuer’s assessment of the actual net profit of a currently trading operational entity, adjusted to exclude abnormal/non-recurring expenditure

37
Q

What is a reasonably efficient operator?

A

the valuer assumes that the market participants are competence operators, acting in an efficient manner

38
Q

what if FMOP?

A

the level of profit that an REO would expect to derive from the FMT based on the trading potential of an asset

39
Q

What is personal goodwill/

A

The level of profit generated over and above market expectations by the current operator that would be extinguished upon sale of the trade related property

40
Q

Provide an overview of the profits method

A
  1. Make an assessment of FMT that could be generated by an REO
  2. make an assessment of gross profit
  3. assess the FMOP
  4. Assess MV by capitalising the FMOP at an appropriate rate of return to reflect the risk of the property and its trading potential
41
Q

What is VPGA 10 of the Red Book?

A

VPGA 10 - Matters which give rise to Material Uncertainty

valuation report must not be misleading
comment on issues resulting in material uncertainty
standard caveat should not be used.

42
Q

VPGA 10 - What is the material uncertainty clause?

A

Material uncertainty clause is used where the level of uncertainty is expected to be higher than normal circumstances.

43
Q

VPGA 10 - Can a lender still rely on a report with a material uncertainty clause?

A

Yes it can still be relied upon, however less certainty and a higher degree of caution should be attached when having regard of the report.

44
Q

What is Part 6 of the Red Book?

A

The International Valuation Standards

45
Q

Can you name some of the IVS general standards?

A

IVS 104 - Bases of Value

IVS 105 - Valuation Approaches and Methods

46
Q

Can you name some of the IVS asset standards?

A

IVS 300 - Plant and Equipment

IVS 410 - Development Property

47
Q
A

APC 2024 (37 decks)

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