The Red Book

Question 1

What does PS1 cover?

Answer 1

Compliance with standards - when a valuation needs to be red book and the 5 exemptions

Question 2

What are the 5 exemptions to the red book under PS1?

Answer 2

1. Internal purposes
2. Statutory function except statutory tax return
3. Negotiation and litigation
4. Expert witness
5. Agency or brokerage

Question 3

What does PS2 cover?

Answer 3

Ethics, competency, objectivity and disclosures
- Must comply with ROC when undertaking valuations
- Independence and objectivity - must apply professional skepticism
- Understand client requirements

Question 4

What does VPS 1 cover?

Answer 4

Scope of work (IVS 101) - contents of a red book TOE

Question 5

What are the 18 requirements for a red book TOE under VPS1?

Answer 5

Identify
1. Valuer
2. Asset
3. Client
4. Third parties
Valuation
5. Date
6. Purpose
7. Bases
8. Currency
Investigations
9. Extent of
10. Info relied on
Report
11. Format
12. Limits on distribution and publication
13. Assumptions and SAs
Above IVS 101
14. Statement of compliance with IVS
15. Statement of RICS monitoring
16. CHP
17. Limit on liability
18. Fee

Question 6

What is covered by VPS 2?

Answer 6

Inspections, Investigations and Records - covers verifying information, desktop valuations, revaluations without re-inspection

Question 7

What is covered by VPS4?

Answer 7

Reports - must include
IDENTIFY - Valuer and status, asset, client, third parties
VALUATION - Date, purpose, basis, approach, figures
INVESTIGATIONS - Extent, sources, info relied on
REPORT - date, assumptions and SAs, restrictions on use, IVS standards, market uncertainty, liability limits

Question 8

What is covered by VPS 5?

Answer 8

Bases of value - MV, MR, Investment value, fair value (+ equitable and liquidation)