Philippine Valuation Standards - RT Punzalan
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Transcript of Philippine Valuation Standards - RT Punzalan
1st NATIONAL
CONGRESS on
Property Valuation
and Taxation
Philippine Valuation Standards
Mr. Raul PunzalanTechnical Adviser
1st NATIONAL CONGRESS on Property Valuation and Taxation
1st NATIONAL
CONGRESS on
Property Valuation
and Taxation
A p p r o a c h t o
Developing the Philippine
Valuation Standards
Objectives
Provide consistency & understanding between providers & users of valuations
Raise the quality of public & private sector valuations & reporting
Promote transparency & reliability of valuations
Reduce financial risk for users of valuations
1st NATIONAL
CONGRESS on
Property Valuation
and Taxation
Review of existing national, regional & international Standards
Existing Standards used in the Philippines (private sector)
Uniform Standards of Professional Appraisal Practice (USPAP) International Valuation Standards (IVS)
Royal Institution of Chartered Surveyors (RICS) ‘Red Book’
Aus/NZ Professional Practice
The European Group of Valuers Associations (TEGOVA)
A p p r o a c h t o
Developing the Philippine
Valuation Standards
1st NATIONAL
CONGRESS on
Property Valuation
and Taxation
Operational Considerations
Harmonized with the IVS
Presented & vigorously reviewed by TWG & exposed to stakeholders
Final draft endorsed for the DOF Secretary’s approval (Promulgated under DO 37-09 dated 19 October 2009)
Standards to be adopted initially by the local government assessors; NGAs & Private Sector expected to follow
A p p r o a c h t o
Developing the Philippine
Valuation Standards
1st NATIONAL
CONGRESS on
Property Valuation
and Taxation
PVS Draft
Philippine Valuation Standards
Technical Review & Exposure
Procedures for the Development of the Philippine Valuation Standards
A Four-Stage Process
Maintenance & Revision
Approval & Implementation
1 2
34
1st NATIONAL
CONGRESS on
Property Valuation
and Taxation
What are STANDARDS?
Standards ARE statements of:Recognised principles & conceptsBest practices in valuation services & reportingAccepted definitions
They do NOT:X Describe different valuation techniquesX Prescribe specific methods of valuation for
different purposesX Tell valuers how to value!
1st NATIONAL
CONGRESS on
Property Valuation
and Taxation
what consists the STANDARDS?
I. Fundamentals
II. Core Standards
III. Application Standards
IV. Guidance Notes
1st NATIONAL
CONGRESS on
Property Valuation
and Taxation
P h i l i p p i n e V a l u a t i o n S t a n d a r d s
I . F u n d a m e n t a l s
1. CONCEPTS FUNDAMENTAL TO GAVP
Provides commentary on legal, economic, & conceptual frameworks
Defines and explains valuation terms & concepts (e.g., Real Estate; Real Property; Personal Property; Asset; Market Value; Price; Cost &Value; Highest & Best Use)
3 market-based valuation approaches: 1) Sales Comparison2) Income Capitalization 3) Cost
1st NATIONAL
CONGRESS on
Property Valuation
and Taxation
2. CODE OF CONDUCT
Addresses the ethical & competency requirements of Valuers
Serves the public interest
Ensures that the results of valuations are
reliable, consistent, & unbiased
P h i l i p p i n e V a l u a t i o n S t a n d a r d s
I . F u n d a m e n t a l s
1st NATIONAL
CONGRESS on
Property Valuation
and Taxation
3. PROPERTY TYPES
Real property
Personal property
Businesses
Financial interests
P h i l i p p i n e V a l u a t i o n S t a n d a r d s
I . F u n d a m e n t a l s
1st NATIONAL
CONGRESS on
Property Valuation
and Taxation
1. MARKET VALUE BASIS OF VALUATION
2. BASES OTHER THAN MARKET VALUE
3. VALUATION REPORTING
P h i l i p p i n e V a l u a t i o n S t a n d a r d s
I I . C o r e S t a n d a r d s
1st NATIONAL
CONGRESS on
Property Valuation
and Taxation
1. VALUATION FOR FINANCIAL REPORTING
A direct extract from the International Accounting Standards (IAS) & International Financial Reporting Standards (IFRS)
Defines & categorizes assets (including land & buildings, machinery, etc) for accounting purposes
2. VALUATION FOR SECURED LENDING PURPOSES
Reduces risk through exposure to inaccurate valuations used by the banking sector.
P h i l i p p i n e V a l u a t i o n S t a n d a r d s
I I I . V a l u a t i o n A p p l i c a t i o n s
1st NATIONAL
CONGRESS on
Property Valuation
and Taxation
3. VALUATION OF PUBLIC SECTOR ASSETS FOR
FINANCIAL REPORTING
Explains the requirements for valuing assets owned or controlled by government or quasi-government bodies
Measures public assets at either ‘Historic Cost’(less accounting depreciation) or ‘Fair Value’(i.e., mark-to-market value)
P h i l i p p i n e V a l u a t i o n S t a n d a r d s
I I I . V a l u a t i o n A p p l i c a t i o n s
1st NATIONAL
CONGRESS on
Property Valuation
and Taxation
1. REAL PROPERTY VALUATION
Summarizes the appraisal process & minimum requirements to arrive at a reasonable & realistic valuation 3 approaches to value (Cost, Income, Sales Comparison) Market value, HABU, etc.
2. VALUATION OF LEASE INTERESTS
Explains leasehold interests & the bundle of rights Shows the hierarchy of rights & interests inherent in
the leasehold
P h i l i p p i n e V a l u a t i o n S t a n d a r d s
I V . G u i d a n c e N o t e s
1st NATIONAL
CONGRESS on
Property Valuation
and Taxation
3. VALUATION OF PLANT, MACHINERY & EQUIPMENT
Common approach to value is by Depreciated Replacement Cost [Replacement Cost New Less Depreciation (RCNLD)]
4. VALUATION OF INTANGIBLE ASSETS
Discusses intellectual property rights, patents, trademark, copyrights, trade secrets, goodwill, franchise, legal life of intangible asset, etc.
Provides the basis for comparison with other types of valuations
P h i l i p p i n e V a l u a t i o n S t a n d a r d s
I V . G u i d a n c e N o t e s
1st NATIONAL
CONGRESS on
Property Valuation
and Taxation
5. VALUATION OF PERSONAL PROPERTY
Provides guidance on the valuation of personal property (e.g., works of art, antiques, collectibles, furniture, fixtures & fittings, equipment, etc.)
6. BUSINESS VALUATION
Covers the valuation of businesses for the purpose of shareholdings, acquisitions & disposals
Shows the relationship between the property assets as part of a going concern & the overall value of the business
P h i l i p p i n e V a l u a t i o n S t a n d a r d s
I V . G u i d a n c e N o t e s
1st NATIONAL
CONGRESS on
Property Valuation
and Taxation
7. CONSIDERATION OF HAZARDOUS & TOXIC SUBSTANCES IN VALUATION
Provides guidance for situations where environmental conditions may have an adverse effect on property values
P h i l i p p i n e V a l u a t i o n S t a n d a r d s
I V . G u i d a n c e N o t e s
1st NATIONAL
CONGRESS on
Property Valuation
and Taxation
8. THE COST APPROACH FOR FINANCIAL REPORTING (DRC)
The basic guidance for DRC valuations: defines physical, functional & external obsolescence
Introduces the concepts of ‘subject to adequate profitability’ & ‘service provision’ (in the case of public buildings)
P h i l i p p i n e V a l u a t i o n S t a n d a r d s
I V . G u i d a n c e N o t e s
1st NATIONAL
CONGRESS on
Property Valuation
and Taxation
9. DISCOUNTED CASH FLOW (DCF) ANALYSIS FOR MARKET
VALUATIONS & INVESTMENT ANALYSES
Provides the approach in valuing businesses & certain types of investment properties
Emphasizes the level of expertise & specialist’s skill required in undertaking such valuations
10. VALUATION FOR AGRICULTURAL PROPERTIES
Provides guidance on valuation related to crop production
Provides guidance on categorizing non-realty elements & on adopting different valuation approaches for different asset elements
P h i l i p p i n e V a l u a t i o n S t a n d a r d s
I V . G u i d a n c e N o t e s
1st NATIONAL
CONGRESS on
Property Valuation
and Taxation
11. REVIEWING VALUATIONS
Distinguishes between administrative (compliance), desk, field, technical, & valuation reviews
Explains the purpose of the review as a reference point
12. VALUATION FOR TRADE RELATED PROPERTIES
Relates to valuation of hotels, gas stations, restaurants, etc.
Provides that the DCF is the normal approach adopted for individual valuations of these properties
P h i l i p p i n e V a l u a t i o n S t a n d a r d s
I V . G u i d a n c e N o t e s
1st NATIONAL
CONGRESS on
Property Valuation
and Taxation
13. MASS APPRAISAL FOR PROPERTY TAXATION
Describes the framework for Ad Valorem Property Taxation, or statistical and economic studies under government administrative programs
Recognizes that valuations undertaken for taxation purposes are carried out in compliance with local laws & regulations.
P h i l i p p i n e V a l u a t i o n S t a n d a r d s
I V . G u i d a n c e N o t e s
1st NATIONAL
CONGRESS on
Property Valuation
and Taxation
14. VALUATION OF PROPERTIES IN THE EXTRACTIVE
INDUSTRIES
Differentiates between mineral extraction & the petro-chemical industry in accordance with the UN Framework Classification
Provides a general explanation of the industries & terminology used
Differentiates between 4 categories: exploration, resource, development, & production properties & emphasizes the specialist nature of quantifying reserves, etc.
P h i l i p p i n e V a l u a t i o n S t a n d a r d s
I V . G u i d a n c e N o t e s
1st NATIONAL
CONGRESS on
Property Valuation
and Taxation
15. VALUATION OF HISTORIC PROPERTY
Provides guidance on valuing heritage properties
Justifies the 3 valuation approaches as applicable to the type & use of the property being valued (e.g., functional, income producing, monumental, etc.)
P h i l i p p i n e V a l u a t i o n S t a n d a r d s
I V . G u i d a n c e N o t e s
1st NATIONAL
CONGRESS on
Property Valuation
and Taxation
Procedures for the Development of the Philippine Valuation Standards
Approval & Implementation
Approved by DOF
Adopted by local gov’t assessors
For General Valuations
For Real Property Tax Valuations
Exposure to NGAs
Study of a
Single NGA
Accepted by NGAs
Amend Administrative Orders / Rules & Regulations
Draft 4 - Final Draft(Standards After Exposure)
1st NATIONAL
CONGRESS on
Property Valuation
and Taxation
Thank You!