Red Book Global Standards Flashcards
What was the aim of the Red Book Global Standards 2020 update?
The aim of the update is to reflect changes to the International Valuation Standards 2022, as well as clarifying certain sections of the existing Red Book Global.
What are the key changes to the Red Book Global Standards Effective from 31 January 2022?
Emphasising the need to agree clear and unambiguous terms of engagement, even when valuations are undertaken for excepted purposes (i.e., VPS 1-5 do not apply) under PS 1 Section 5.
The terms quasi, partial or non Red Book should not be used in terms of engagement or reporting. Instead, the exception should be specifically stated and explained in the terms of engagement and valuation report.
Requiring more detailed commentary on sustainability/resilience and environmental, social and governance (ESG) matters in VPGA 8 Valuation of Real Property Interests. These terms are defined in Part 2: Glossary. There is also a reference to the proposed RICS Guidance Note Sustainability and ESG in Commercial Property Valuation and Strategic Advice 3rd Edition, also due to be published in 2022.
Various amendments are made to the VPGAs, in particular VPGA 4 Individual Trade Related Properties and the reference to IVS 230 Inventory.
What are the three types of standards set out in the Red book?
Professional standards – MANDATORY
Valuation technical and performance standards – MANDATORY
RICS global valuation practice guidance – applications (VPGAs) – MANDATORY
What is included in Professional standards – mandatory?
PS 1 – Compliance with standards where a written valuation is provided
PS 2 – Ethics, competency, objectivity and disclosures
What is included in Valuation technical and performance standards – mandatory?
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.
RICS global valuation practice guidance – applications (VPGAs) – advisory
VPGA 1 – Valuation for inclusion in financial statements
VPGA 2 – Valuation of interests for secured lending
VPGA 3 – Valuation of businesses and business interests
VPGA 4 – Valuation of individual trade related properties
VPGA 5 – Valuation of plant and equipment
VPGA 6 – Valuation of intangible assets
VPGA 7 – Valuation of personal property, including arts and antiques
VPGA 8 – Valuation of real property interests
VPGA 9 – Identification of portfolios, collections and groups of properties
VPGA 10 – Matters that may give rise to material valuation uncertainty
Define Market Value.
The estimated amount for which an asset or liability should exchange
- On the valuation date
- Between a willing buyer and willing seller
- Arm’s length transaction
- After proper marketing
- Where the parties acted knowledgeably, prudently and without compulsion
Define Fair Value
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.
What is UK PS1?
Compliance with the Valuation Standards set by the Red Book Global within the UK Jurisdiction.
What must the Terms of Engagement Comply with?
UK VPS 1 – Red Book Compliant
What does VPS 3 outline?
Regulated Purpose Valuations and the reporting requirements.
What outlines the guidance for valuation for accounting purposes?
UK VPGA 1 – IFRS (International Financial Reporting Standards) and UK GAAP (Generally Accepted Accounting Practice).
Is there any Guidance of Depreciated Replacement Costs?
UK VPGA 1.5
What does UK VPGA 4 highlight?
The Guidance on the valuation for Local Authorities for financial reporting purposes
What guidance is there for Fair Value valuations?
UK VPGA 4.1
