Valuation Red Book Quiz Flashcards
All the UK sections of the red book issued separately to the global sections?
- Yes
When was the UK red book last updated?
- With affect from 14th of January 2019.
What is the full title of the red book?
- RICS valuation global standards 2020.
When was the red book global laughed updated?
- 31st of January 2020.
What were the key changes to the red book in 2020 ?
- IVS changes incorporated.
- Now called Red Book Global.
- Other minor changes to various section.
What does IVS stand for?
- International valuation standards.
what sections of the global red book are mandatory?
- PS1- 2.
- VPS 1- 5.
What does PS1 relate to?
- Compliance with standards where a written valuation is provided .
What does the red book apply to?
- Written valuation advice.
- AVM who derived output.
- Oral valuation advice (to the fullest extent possible).
Which of these are accepted valuations under PS1?
- Agency or brokerage advice [not a purchase report].
- Internal purposes.
- In the course of negotiations stroke litigation.
- Acting as an expert witness.
- Statutory functions.
Which sections of the red book the accepted valuations not have to comply with?
- VPS 1- 5.
Can an external valuer provide an internal purpose valuation?
- Yes.
What does PS2 relate to?
- Ethics, competency, objectivity and disclosures .
Which of these do you need to satisfy in order to be competent to provide a valuation?
- appropriate qualifications.
- Membership of a professional body demonstrating ethical standards .
- Sufficient local knowledge .
- Compliance with your country’s legal regulations.
- Where applicable compliance with the RICS valuer registration requirements.
If you decide to provide preliminary advice or a draught valuation report what should you state in writing?
- That your opinion is provisional and subject to completion of the final report.
- That your advice is provided for the client’s internal purposes only .
- That any draught is on no account to be published or disclosed .
What type of valuations may be relied upon by a third party?
- Published financial statement.
- Takeovers or mergers.
- Stock Exchange or similar body.
If you have previously valued an asset for any purpose what additional disclosures must you make?
- Relationship with the client and previous involvement.
- Proportion of face.
- Rotation policy.
- Time as signatory .
If your firm is too small to have a rotation policy or valuation panel what else could you do to ensure objectivity?
- Seven yearly review by another member .
Could a conflict of interest exist if you or your firm have been involved with the asset during the last 12 months?
- Yes.
In relation to the proportion of fees additional disclosure what would a significant amount be considered as?
- 5- 25%.
What does VPS1 relates to?
- Terms of engagement [scope of work].
Do your terms of engagement have to be in writing ?
- Yes.
Can the valuation date be different to the report dates?
- Yes.
Can you provide a restricted valuation service?
- Yes- if it is reasonable with regard to the purpose and subject to appropriate conditions.
What is an assumption?
- Something that is reasonable to accept as fact without specific investigation or verification .
What is a special assumption ?
- Something that assumes facts that differ from the actual facts existing at the valuation date or that would not be made by a typical market participant in a transaction on the valuation date.
what does VPS2 relate to?
- Inspections, investigations and records
How can you deal with limitations or restrictions on inspection, inquiry or analysis?
- Record them in your terms of engagement and report .
Can you revalue a property without re inspecting?
- Yes - providing there has been no material changes to the property .
What does the VPS3 relate to?
- Valuation reports.
What is an internal valuer?
- I value who is in employment of either the enterprise that owns the assets, or the accounting firm responsible for preparing the enterprises Financial records and / or reports .
What should you do if market conditions change between the valuation date and date of the report?
- Comment that values change overtime .
- Draw attention to this.
What does VPS4 relate to?
- Basis of value, assumptions and special assumptions .
What are the bases of value recognised under the red book?
- Market value.
- Market rent.
- Investment value [worth].
- Fair value.
What is 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 arms length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion .
Should you reflect special value [from a special purchaser, not a general market expectation] oh marriage value in market value?
- No.
What is market rent?
- The estimated amount for which an interest in real property should be leased on the valuation date between a winning less or and a willing lessee or appropriate lease terms in an arms length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion.
What is investment value open brackets worth close brackets?
- The value of an asset to a particular owner or perspective owner for individual investment or operational objectives .
What is 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 measurements date.
Where does the fair value definition come from?
- IFRS 13.
is there generally any difference between market value and fair value?
- No.
When would fair value generally be used?
- In financial statement valuations.
Can you refer to forced sale value?
- Valuation approaches and methods.
What is the cost approach?
- Based on the economic principle that I purchaser or pay no more foreign asset than the cost to obtain one of equal utility whether by purchase or construction .
What is the market approach?
- Based on comparing the subject assets with identical or similar assets open brackets or liabilities] for which price information is available, such as a comparison with market transactions in the same, or closely similar, type of asset [or liability] within an appropriate time horizon.
What is the income approach?
- Based on capitalization or conversion of present and predicted income [cash flows], which may take a number of different forms, to produce a single current capital value.
How do are RICS regulate valuation work?
- Valuer registration scheme [VRS].
Do you have to pay to become a registered valuer?
- Yes.
