Red Book / General Compliance Flashcards
Did you include any market valuation uncertainty clause?
No. Mentioned that in Feb-22 Russia invaded Ukraine, however there was no evidence that transaction activity and the sentiment of buyers and sellers had changed.
Although I did highlight importance of valuation date as the situation could rapidly change.
How did you request consent to use this as your case study?
Emailed and stated that the information would not be shared with anyone other than who is required to review my assessment
Which parts of the Red Book are relevant to loan security valuations?
VPGA 2 ‘Valuations for secured lending’
* Conflict of interest = previous (24 months)/current/anticipated involvement with borrower
* Additonal reporting requirements e.g. SWOT, special assumptions
VPGA 10- ‘Material Valuation Uncertainty Clause’
* Must not mislead
* Must not use standard caveat
What timeline did you agree with the client?
15 days from receipt of full information
In what situation would you use the measurement date instead of the valuation date?
If the valuation was for accounts purposes under the IFRS, I would be reporting Fair Value which is at the measurement date (same thing as valuation date in RICS’ view)
What is the process of undertaking a conflict of interest check?
- Internal database - input the client and property - it provides a conflict check report that details all past and current involvement
- Reviewed this and decided whether any findings raised potential conflicts of interest
Besides the usual, what one thing was included in the terms of engagement specific to this instruction?
Fee = £10,000 which included Groundsure Siteguard report
How does Market Value differ to Fair Value?
The RICS considers them to be the same thing, however the IFRS considers them to be different things and therefore requires Fair Value to be reported under IFRS
When did the RICS Valuation - Global Standards 2021 become effective?
31 January 2022
Define Market Value
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 with both parties acting knowledgeably, prudently and without compulsion.
