Red Book

Question 1

Where in the global Red Book would you specifically find out about specific purpose valuations?

RICS Valuation - Global Standards 2017

Answer 1

VPGA’s 1 to 10

1 - Vals for inclusion in financial statements
2 - Vals of interests for secured lending
3 - Vals of businesses and business interests
4 - Vals of individual trade related properties
5 - Vals of plant and equipment
6 - Vals of intangible assets
7 - Vals of personal property, including arts and antiques
8 - Vals of real property interests
9 - Identification of portfolios, collections and group properties
10 - Matters that may give rise to material valuation uncertainty

Question 2

What is the structure of the red book 2017?

Answer 2

Part 1: Introduction

Part 2: Glossary

Part 3: Professional Standards
PS 1 - Compliance with standards where a written valuation is provided
PS 2 - Ethics, competency, objectivity and disclosures

Part 4: Valuation technical and performance standards
VPS 1 - Terms of Engagement
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

Part 5: Valuation Applications
VPGA 1 - Vals for inclusion in financial statements
VPGA 2 - Vals of interests for secured lending
VPGA 3 - Vals of businesses and business interests
VPGA 4 - Vals of individual trade related properties
VPGA 5 - Vals of plant and equipment
VPGA 6 - Vals of intangible assets
VPGA 7 - Vals of personal property, including arts and antiques
VPGA 8 - Vals of real property interests
VPGA 9 - Identification of portfolios, collections and group properties
VPGA 10 - Matters that may give rise to material valuation uncertainty

Question 3

Are the VPGAs mandatory?

Answer 3

No - advisory only

Question 4

Why do financial statement valuations require particular care?

Answer 4

The must comply strictly with the financial reporting statements adopted by the entity
They must be relied upon by third parties

Question 5

What are the two commonly used financial reporting standards?

Answer 5

International Financial Reporting Standards (IFRS)

UK Generally Accepted Accounting Principles (GAAP)

Question 6

What types of companies generally must adopt IFRS as their financial reporting standard?

Answer 6

PLC - Public listed companies

Question 7

Under FRS what basis of valuation should be adopted?

Answer 7

Fair Value

Question 8

What does VPGA 2 relate to?

Answer 8

Secured lending

Question 9

What additional criteria applies to secured lending valuations?

Answer 9

That the valuer has no previous, current or anticipated involvement with the borrower, or prospective borrower, the asset to be valued or any other party connected with a transaction for which the lending is required (24 months, or longer is requested)

Question 10

What information should you specifically request for a secured lending valuation?

Answer 10

• Intended lender
• Further information on marketing, incentives and circumstances of any transaction relating to the subject
• Any recent transactions / price agreed on the subject property
• Terms of the lending facility

Question 11

What is the most widely used basis of valuation for secured lending valuations?

Answer 11

Market Value

Question 12

Does the RICS provide any guidance on sustainability and valuation?

Answer 12

Yes - for both residential and commercial property

Question 13

What sustainability issues could you reflect in your advise?

Answer 13

Green design features
Life cycle materials
Embodied carbon
Energy efficiency 
Waste management
Location
Accessibility