The latest updates to the RICS Valuation – Global Standards (Red Book Global) come into force on 31st January 2020. The main reason for issuing the update is to take account of the changes to the International Valuation Standards (IVS) - which the Red Book Global adopts and applies. However, the opportunity has been taken to make some other changes and refinements to the Red Book Global in the light of experience and developments since the current edition was issued in June 2017.
The IVS-related changes include:
- Title: The year of publication is no longer included in the title of the standards. Instead, the 'effective date' (the date at which the standards come into effect) will be clearly set out on the cover.
- Effective date: The latest IVS becomes effective from January 2020. However, the IVSC encourages early adoption from the date of publication. Valuers will need to make clear which edition of the IVS they are using when preparing a valuation report.
- New chapter: The updated IVS includes a new chapter, 'IVS 220 Non-Financial Liabilities' as part of the intangible asset standards.
- Technical revisions: Updates also include the technical revisions consulted on throughout 2018 and 2019.
- Glossary: The IVS glossary has been updated to include new terms and to provide additional clarifications. These changes also reflect the IVSC's ongoing efforts to align valuation standards, terminology and definitions.
- Notable updates: Other key updates have been introduced in relation to 'development property' (IVS 410), 'limitations' (IVS 102), and 'valuation models' (IVS 105).
In addition to the above, the following RICS-initiated changes to the Red Book Global have also been made:
Part 3 Professional standards:
- PS 1 Paragraph 1.3: the text has been expanded to clarify that "written" encompasses all forms of communication other than purely oral.
- PS 2 Section 1 Paragraph 1.5: a new second sentence has been inserted, tying this in with Section 3 that follows and adopting the widely used phrase "professional scepticism" as an aspect of objectivity which is growing in importance in relation to information and data.
Part 4 Valuation technical and performance standards:
- VPS 3 Section 2.2 (l): A new paragraph 3 has been added under Implementation stressing the need to signal the relevance and significance of sustainability and environmental matters wherever appropriate.
- VPS 3 Section 2.2 (o): The wording of paragraph 4 has been strengthened to ensure that where material uncertainty applies, it is explicitly signalled
Part 5 Valuation:
- VPGA 1: New material on the valuer's role in preparing financial statements has been added in Section 5. This draws attention to a number of mandatory requirements in earlier parts of the Red Book Global and may serve as a useful reminder or checklist.
- VPGA 7: Some additions to, and strengthening of, the guidance in relation to arts and antiques has been inserted, with further emphasis on the issue of provenance.
- VPGA 8: Some additions to, and strengthening of, the text in relation to environmental matters including sustainability.
The valuation of assets, both tangible and intangible, plays a crucial role in global financial and real estate markets, as well as the global economy. The changes to IVS and the Red Book reflect the growing importance of combining professional, technical and performance standards to deliver high quality valuation advice.
Compliance with RICS Red Book Global is mandatory for all RICS members, providing confidence to clients, governments, regulatory bodies, and the public that RICS professionals deliver consistent, independent, and transparent valuations.