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News & opinion

9 APR 2020

RICS seeks public input on best practices in valuation of machinery

Would the development of a Mandatory Performance Framework enhance the quality, consistency and transparency of the machinery and equipment valuations for financial reporting? This is the question RICS and the ASA, with the support of other organizations, have brought to the market in a public consultation. The consultation began late February and will close on April 30.

Several years ago, the US Securities and Exchange Commission (SEC) criticized individuals performing fair value measurement estimates of entities, intangible assets, financial instruments and tangible assets for financial reporting purposes for SEC-registered US public companies. Public statements by US capital market regulators have called into question whether some of the individuals conducting fair value measurement estimates have the requisite training, qualifications, experience and expertise to perform this type of work. These regulators have also questioned whether individuals conducting these estimates are subject to a consistent set of professional, technical and ethical standards.

In response to these regulatory concerns, ASA and RICS, along with AICPA, non-membership organizations and others, have worked together to focus on the issues facing the valuation profession and how to address them. This collaboration resulted in a Mandatory Performance Framework and a Certified in Entity and Intangible Valuations (CEIV) Credential.

The Mandatory Performance Framework (MPF) developed performance requirements specifically for entity and intangible valuations – setting out what work should be done in order to prepare a professional work product. As the MPF becomes more widely adopted, RICS and its partners are seeking public input as to what other asset classes would require a similar set of guidelines.

The consultation began late February and will close on April 30. Valuers with special knowledge of machinery and equipment valuations for financial reporting are requested to fill out a consultation form to provide their perspectives. The consultation includes a request for specific recommendations and topics to be addressed by an MPF.  The profession’s input on this initiative is crucial to making this a success.

Download the consultation form below, with instructions on how to submit.

Download form here