RICS Valuer Registration – Cyprus Going for Gold Graham Stockey FRICS IRRV(Hons) – Principal Assurance Surveyor for RICS Regulation Joseph Hardy BSc(Hons) MRICS – EMEA Regulatory Reviewer
Valuer Registration: What does it do ? Valuer Registration ensures that members always meet and maintain the RICS Global – Gold Standard for valuation. That measure which sets RICS members apart. ► Risk monitoring and quality assurance ► Checking compliance with the Red Book
Valuer Registration Valuer Registration? ► RICS Valuer Registration is the independent quality assurance process that reinforces and ensures compliance with the highest professional standards in valuation – the RICS Global Gold Standards, Red Book. ► To continue to raise RICS valuation standards ► Global consistency – to ensure RICS valuations remain the global gold standard ► Monitor output – improve quality ► Public protection and demonstrate robust self-regulation ► Mitigate the risks of statutory intervention
RICS Valuer Registration ► Established in 2010 – now mandatory in 29 countries ► Developed jointly by RICS, valuation professionals and end-users ► Specialist Valuer Registration reviewers in every world region ► Aim is to assure compliance with RICS standards ► c. 300 reviews undertaken each year to firms sponsoring registered valuers ► Average 88% of those audited received improvement advice
VR Mandatory Markets by Region Europe Belgium ► Cyprus ► Denmark ► France ► Ireland ► Italy ► Luxembourg ► Netherlands ► Spain ► United Kingdom ►
Registered Valuers by Country
Valuer Registration: Stakeholder benefit What do valuation users want? ► Assurance that the valuer is competent and qualified ► No conflicts of interest ► Plain Language, Accessible Reports, Technical terms defined. ► Compliance with professional / international standards. ► Consistency
Valuer Registration : Do I need to be a Registered Valuer? Valuer Registration has been MANDATORY in Cyprus since September 2016 .
Valuer Registration Monitoring: The Visit PS 2 Ethics, Competency, Objectivity & Disclosures The most fundamental requirement is for the Professional to be able to demonstrate independence & qualification for task. In our RRV we look to ensure the following processes are in place: ► Robust and formal conflict of interest checks ► Record results of conflict of interest checks in case file ► Include cross discipline and associated activity checks ► Include clear declarations of conflict status in terms of engagement and valuation reports ► Do not accept instructions on the periphery of your valuers competence, firms operational area or specialisms ► Ensure the complete ability to demonstrate qualification for task – Keep up to date CV’s on file
Valuer Registration Monitoring: The Visit VPS 1 Terms of Engagement This is the agreement between the Professional and the Client, we look to confirm the following minimum, key requirements are included: ► Case specific, agreed terms of engagement held on file ► Clear and unambiguous purpose stated ► Completely Red Book compliant content ► Clear guidance on extent, limitations and use of report given ► Assumptions, special assumptions and scope of inspection clearly explained Failure to issue and agree compliant terms places the firm, client and stakeholders at risk
Valuer Registration: The visit VPS 1 Terms of Engagement RED BOOK SAYS - a. Identification and status of the valuer b. Identification of the client(s) c. Identification of any other intended users d. Identification of the asset(s) or liability(ies) being valued e. Valuation (financial) currency f. Purpose of the valuation g. Basis(es) of value adopted h. Valuation date Nature and extent of the valuer’s work – including investigations – and i. any limitations thereon Nature and source(s) of information upon which the valuer will rely j. k. All assumptions and special assumptions to be made Format of the report l.
Valuer Registration: The visit VPS 1 Terms of Engagement m) Restrictions on use, distribution and publication of the report n) Confirmation that the valuation will be undertaken in accordance with the IVS o) The basis on which the fee will be calculated p) Where the firm is registered for regulation by RICS, reference to the firm’s complaints handling procedure, with confirmation that a copy will be made available on request q) A statement that compliance with these standards may be subject to monitoring under RICS’ conduct and disciplinary regulations. r) A statement concerning any limitations on liability that have been agreed. Some seem to think this is like an exam where you are asked to attempt any five! Every item is mandatory without exception. Terms of Engagement is a memorandum of the scope of your instructions. It helps limit your liability.
Valuer Registration Monitoring: The Visit VPS 2 Inspections and investigations In our review we look for supporting material in the file to substantiate the valuation and give confidence that the results can be relied upon: ► Legible, structured and comprehensive site notes and other investigations on file ► Comparable data sourced, dated and referenced with analysis on file ► Clear linkage between comparables and valuation ► Clear and appropriate valuation calculation and rationale on file ► Clearly documented details of information relied on, its source and its reliability ► A clear audit trail of information to support valuation & report ► Good file management e.g. Complete, structured, tidy Clear site notes & investigations together with the comparable and valuation exercise are key to substantiating the valuation and report. Any omissions can undermine the validity of the valuation report ‘ IF IT ISN’T WRITTEN DOWN, IT DIDN’T HAPPEN’.
Valuer Registration: The visit VPS 2 Inspections and investigations RED BOOK SAYS - ► VPS 2 Inspections and investigations ► Inspections and investigations must always be carried out to the extent necessary to produce a valuation that is professionally adequate for its purpose. The valuer must take reasonable steps to verify the information relied on in the preparation of the valuation and, if not already agreed, clarify with the client any necessary assumptions that will be relied on. ► VPGA 8: Valuation of real property interests ► Advisory not mandatory but gives a list of matters which typically affect the value of a real estate asset. Site notes and desktop enquiry notes should reflect all of these matters otherwise the valuer cannot say they have taken everything into account in considering value. ► VPS 2 Valuation records ► A proper record must be kept of inspections and investigations, and of other key inputs, in an appropriate business format.
Valuer Registration: The visit VPS 2 Inspections and investigations ► VPS 2 cont’d ► Valuation records ► To maintain a proper audit trail and be in a position to respond effectively to a future enquiry, legible notes (which may include photographs or other images) of the findings and, particularly, the limits of inspection and the circumstances in which it was carried out must be made. The notes should also include a record of the key inputs and all calculations, investigations and analyses considered when arriving at the valuation. ► All of these requirements underline the importance of creating and keeping an Audit Trail. ► ‘ IF IT ISN’T WRITTEN DOWN, IT DIDN’T HAPPEN’.
Valuer Registration Monitoring: The Visit VPS 3 Valuation Reports The report is the deliverable, the client interaction point. We check if the report is fit for purpose based on Red Book and does it match the terms of engagement agreed?: ► Include all elements required by Red Book ► Have a clear and unambiguous purpose stated ► Provide clear guidance on the extent, limitations and use of report ► Are assumptions, special assumptions and scope of inspection clearly explained ► Valuation approach and reasoning clearly and adequately presented ► Appear well drafted & written, with easily understood report material We want to ensure the report content is compliant and that there is a demonstrable audit trail of information to substantiate the valuation reported.
Valuer Registration: The visit VPS 3 Valuation Reports ► i) Assumptions and special assumptions ► j) Restrictions on use, distribution and publication of the report ► k) Confirmation that the assignment has been undertaken in accordance with IVS ► l) Valuation approach and reasoning ► m) Amount of the valuation or valuations ► n) Date of the valuation report ► o) Commentary on any material uncertainty in relation to the valuation where it is essential to ensure clarity on the part of the valuation user ► p) A statement concerning any limitations on liability that have been agreed. This document is the mirror image of the Terms of Engagement document BUT its content is standalone – All items must be included. Yes, this duplicates the Terms of Engagement. It is supposed to.
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