MINUTES OF THE MEETING OF THE IVSC PROFESSIONAL BOARD

Transcription

1 MINUTES OF THE MEETING OF THE IVSC PROFESSIONAL BOARD PRESENT: Greg Forsythe Chairman Roy Farthing Vice Chairman Marianna Todorova Doug McPhee Chris Mercer Nick French Jiang Wei Mauro Bini HELD AT 1 KING STREET, LONDON EC2V 8AU Thursday 27 March 2014 IN ATTENDANCE: Mary Jane Andrews Technical Advisor to the Board Marianne Tissier IVSC Executive Director Chris Thorne IVSC Technical Director Plus 7 observers 1. CHAIRMAN S INTRODUCTION 1.1 The Chairman opened the meeting by welcoming Board members and observers to the meeting. He also welcomed Mary Jane Andrews to her first meeting as technical advisor to the Board. 2. APOLOGIES FOR ABSENCE 2.1 Apologies for absence were received from David Faulkner who had provided written comments on a number of agenda items. 3. MINUTES OF PREVIOUS MEETING & MATTERS ARISING 3.1 The Board approved the minutes of the meeting held on 7 November There were no matters arising. 4. OVERVIEW OF IVSC ACTIVITY AND INTERACTION WITH OTHER BODIES 4.1 The Board noted the report summarising conferences and other significant meetings held since its last meeting. Mauro Bini reported the success of the second conference organised by the Organismo Italiano di Valutazione (OIV) on business valuation. The conference had attracted 300 delegates and there had been more than 1,000 downloads of the presentation slides from the OIV website. Due to the success, the OIV is to make this an annual event. 4.2 The IVSC Chief Operating Officer was asked to comment on recent meetings that she and/or the IVSC chairman had attended with, inter alia, the European Commission, IMF, World Bank,

2 Federal Deposit Insurance Corporation. Two key themes were discussed at these meetings the valuation of financial instruments and the development of the valuation profession. She also reported that she and the chairman had met with the Bank of England the previous day and that the chairman was to speak at the meeting of the Financial Stability Board Regional Consultative Group for Europe on 7 May. A telephone conversation with representatives from the Basel Committee on Banking Supervision was to take place on 31 March. 4.3 Marianna Todorova reported that she would be attending the next meeting of the Appraisal Issues Task Force (AITF) taking place on 9 May. The AITF is now sponsored by The Appraisal Foundation. Nick French continues to promote the IVSC at the monthly talks he gives to valuers within the UK. Doug McPhee reported that there is considerable interest in the Middle East in valuation standards and with the publication of the Arabic translation of the IVSs, there was an opportunity to promote the IVSC in the region. 4.4 Jiang Wei reported that the review of appraisal law in China is still under way. 4.5 Chris Mercer is in contact with the chairman leading the review of the ASA Principles of Appraisal Practice and Code of Ethics and has forwarded to him relevant IVSC publications. 5. REPORT ON IVSC STANDARDS BOARD ACTIVITY 5.1 The Technical Director introduced the report on IVSC Standards Board activity. At its meeting the following day, the Standards Board is expected to agree two consultation papers for release Agenda Consultation, and Structure and Scope of the International Valuation Standards (IVSs). The Board noted that the debate on the structure and scope of the IVSs could have implications for the International Professional Standards (IPSs) should it be agreed that the IPSs would mirror the IVSs structure. 5.2 The Technical Director reported that the draft Memorandum of Understanding (MoU) on IVS adoption or convergence had been circulated for comment to eleven standard setting organisations involved with the initiative with a request for comment by mid-february. Discussions are continuing with those organisations. The target date for the signing of the MoU is July ILLUSTRATIVE EXAMPLES 6.1 Marianna Todorova reported that the Exposure Draft Illustrative Examples, Chapter 1 Bases of Value had been issued in January with comments requested by 31 March. Marianna expects to have an assessment of the extent of changes (more substantial or minor) arising from comment letters received by mid-april. The Technical Director stated that the staff expects to complete the comment letter analysis by 30 April. If he letters indicated that more substantial change are needed and/or further Board input is required, the Board will have the opportunity to discuss further at its June meeting. If the letters were broadly supportive of the draft as published, a revised paper would be brought back to the Board at its June meeting to consider the document for issuance. 6.2 The working group developing the Illustrative Examples had agreed that the next chapter to be developed should be on Market Participants which was also generally supported by other feedback received through the comment process to date. Marianna suggested that if the work on Chapter 1 cannot progress at all in the interim (eg due to a pending major change in direction), the working group s efforts could be directed to Chapter 2, Market Participants to produce a skeleton draft. The Board agreed that this was reasonable. 27 March 2014 PB Minutes 2

3 6.3 Marianna reported that as the Illustrative Examples project progressed, some inconsistencies with the IVS Framework might be identified that would need to be raised with the Standards Board. 6.4 The Board discussed the need to maximise the number of responses to exposure drafts. The Chairman reported that the Board of Trustees had also discussed the issue and the need to more actively reach out to Valuation Professional Organisations and other stakeholders. 7. SPECIALISED PUBLIC SERVICE ASSETS 7.1 Roy Farthing reported that responsibility for the project had been transferred to the Standards Board. The Standards Board has included a question as to what priority should be given to the project in its draft proposed Agenda Consultation. In light of the significant investment of Board member time in the project to date and the fact that an Exposure Draft had been issued, the Board agreed that, although it could be published in a different format to a Standard or TIP, the material itself must not be lost. Roy Farthing is to attend the Standards Board meeting the following day for its discussion on this item 8. IVSC PROFESSIONAL BOARD DUE PROCESS 8.1 The Board discussed the revised Due Process. It asked that it be circulated with a copy of the current Due Process with changes highlighted before agreeing to the changes to be submitted to the Board of Trustees for approval. 8.2 The Due Process quotes the responsibilities of the Professional Board as set out in the IVSC Bylaws. The Chairman asked members to reflect on whether these accurately reflect the current remit of the Board. If they do not, the Board should agree proposed Bylaw amendments to be submitted to the Board of Trustees for approval. 8.3 The Board asked that it be circulated with the Due Process for the Standards Board so that it could be aware of any differences and the reasons for such differences. 9. FAQs ON THE INTERNATIONAL PROFESSIONAL STANDARDS 9.1 The Board reviewed the draft FAQs prepared by Mary Jane Andrews. 9.2 The following amendments were agreed: (i) (ii) (iii) (iv) (v) The term FAQs in the heading should be spelt out in full; References to the IVPB in the draft should be amended to the Professional Board; It should be made clear in the section About the IVSC, that the remit of the IVSC covers the valuation of all classes of asset and liabilities; The header above Q5 should read About the International Professional Standards and the relationship between those standards and the IVSs should be made clear in the answer to the question; The last paragraph in response to Q7 to come immediately after the question. The third sentence in the current first paragraph to be amended to read This has led to fragmentation by geography, discipline, and asset type, and disparate and varying qualifications of the individuals preparing valuations. The first sentence of the current second paragraph to be amended to read Some VPOs are very mature with robust education programmes,. ; 27 March 2014 PB Minutes 3

4 (vi) (vii) (viii) Q8 to be redrafted to read valuations for financial reporting purposes rather than valuations included in financial statements ;. In the response to Q10, reference is made to adoption and recognition by others. What is meant by others should be explained. The reference to the IVPB in the second paragraph should be to the IVSC; A call out to be used adjacent to Q14 to emphasise the message that the IVSC does not deliver an education programme or issue accreditations. 9.3 With those amendments the Board approved the FAQs for review by the Board of Trustees prior to publication. 10. ROAD MAP FOR THE DEVELOPMENT OF THE INTERNATIONAL PROFESSIONAL STANDARDS 10.1 Mary Jane Andrews introduced the road map for discussion by the Board. The Board agreed that the road map is an internal paper for the Board and not for public distribution. The Board made the following minor amendments to the road map and noted that further amendments would be made as the project to develop the IPSs progressed: (i) (ii) (iii) (iv) (v) Delete paragraphs 3 on key goals and 5 on key milestones; Paragraph 4 - other critical success factors are obtaining significant level of feedback to exposure drafts, and adoption and recognition of the IPSs; Paragraphs 6,7,9 should refer to Working Groups and not Task Forces; Paragraph 8 - standards in developing and emerging VPOs and standards of other professional organisations should be considered; Paragraph 9c - the Board would undertake the role of a steering committee for the project The Board agreed that, although it was important to leverage off existing standards issued by VPOs, the material may not always be current. There may be concepts and issues relevant to the IPSs that have yet to be addressed by VPOs The Board agreed the need to move ahead with establishing working groups to develop the IPSs. The chairman will be meeting with the Advisory Forum Working Group in May and this will provide an opportunity to discuss the project and seek the help of the Advisory Forum in encouraging applications for membership of the working groups. Doug McPhee emphasised the importance of ensuring input from the regulators as the project develops, through membership or observer status of the working groups and the consultation process. 11. FRAMEWORK FOR INTERNATIONAL PROFESSIONAL STANDARDS 11.1 The Board reviewed the draft Framework that had been prepared by Mary Jane Andrews The following comments were made and amendments agreed: 27 March 2014 PB Minutes 4

5 (i) (ii) (iii) (iv) (v) (vi) (vii) (viii) Paragraph 2 other possible stakeholders should be listed; Paragraph 11 the wording to be amended to reflect that in the FAQs; Paragraph 12 words in certain jurisdictions to be added before the clause starting there is not requirement for a valuation specialist. ; Paragraph 13 the second bullet to be amended to read by expertise with the asset classes identified but with no accompanying information. Chris Mercer questioned whether the term complex financial securities would be more appropriate than financial instruments. The Board agreed that the wording must be in accordance with that in the emerging IVSC Strategic and Business Plan; Paragraph 17 the use of the phrase in some markets should be reviewed and the wording codifying the best existing practices amended; Paragraph 19 to be deleted; Paragraph 29 onwards much is reproduced from the Framework for International Education Standards for Professional Accountants published by the International Accounting Education Standards Board and would be reviewed to ensure it is appropriate for the professional valuer. If much is retained, permission will be sought from the IAESB to reproduce the material; Paragraph 42 replace the word membership with accreditation ; (ix) Paragraphs although the Measurement of the Effectiveness of Learning and Development is important to reference in the Framework, it is for those who are delivering the education and training to agree on the measurement approach it wished to introduce; (x) The document should be reviewed and, where appropriate, references to IVPB amended to IVSC The Board discussed paragraphs 16 and 31 and noted the concern expressed by Mauro Bini that if a set of common competencies was agreed this could lead to professional valuers undertaking valuations outside their area of competence. The Board agreed that paragraph 31 should discuss competencies in the context of the asset class, the purpose of the valuation and the industry sector The wording in paragraphs 15, is too restrictive. The document needs to be sensitive to the fact that not all valuers are currently members of a VPO and that different countries are at different stages of development. Transitional language needs to be introduced to recognise the status quo so none feel excluded while at the same time not undermining the advantage of belonging to a VPO or the need to develop a transition plan to meet the requirements of the IPSs The Chief Operating Officer reported that the Board of Trustees had agreed at its meeting on 10/11 March 2014 to establish an IVSC Member Body Compliance and development Programme. A member of the Board, Lee Hackett, was working with the Executive Director to develop the terms of reference for a Compliance and development Committee for approval of the Board of Trustees. The Board agreed to delete the paragraphs in the draft Framework on IVSC Member Body Obligations, making reference only to the fact that this was under development by the Board of Trustees at this stage. 27 March 2014 PB Minutes 5

6 11.6 The Board reviewed Appendix A2 and provisionally agreed the following structure for the IPSs: Introduction scope and effective date Objectives Requirements Commentary elaborates on the scope, the objective and the requirements The Board was given a copy of an IVPB publications framework prepared by Jiang Wei, showing the relationship between them. The Board thanked Mr Jiang for his work and agreed that this should be further discussed at its working session the following day The Board debated whether the Framework should be issued for public exposure but agreed this was unnecessary beyond discussions with the Board of Trustees and the Advisory Forum Working Group. Much of the content of the Framework had been included in the Discussion Paper issued by the Board in COMPETENCIES FOR PROFESSIONAL VALUERS 12.1 The Executive Director reported that the working group of herself and Jiang Wei had been collating information issued by other organisations. The priority is to develop competencies for business valuation and from there identify common elements that would apply to the valuation of all assets. 13. PRESENTATION MATERIALS 13.1 The Board noted that it would be asked to do a final review of the Powerpoint at its working session following which the slides would be made available for use by Board members and VPOs. 14. IVSC PUBLICITY 14.1 The Board received a presentation from Spada, the IVSC PR and marketing consultancy. The Spada team gave a presentation on activity during the past year and reported on an increasing media profile and growing awareness of the IVSC. Spada led a discussion on how to maximise the communication channels open to the IVSC. Board members were asked, in particular, to identify key conferences where the IVSC should be represented. Doug McPhee emphasised that, although important to financial reporting, greater attention should be paid to the importance of valuation to current issues such as the asset quality review that is being carried out in the Eurozone area and the too-big-to-fail debate. Board members were also asked for their support in expanding the use of the IVSC LinkedIn page by liking IVSC posted articles and sharing content with their own followers. 15. DRAFT POLICY PAPER GLOBAL REGULATORY CONVERGENCE AND THE VALUATION PROFESSION 15.1 The Chairman reported that the Board of Trustees had discussed the paper at its meeting on 10/11 March 2014 and agreed that, subject to a final edit, the Professional Board should proceed with issuing the paper on behalf of the IVSC. 27 March 2014 PB Minutes 6

7 16 DEVELOPMENT OF TOOLKIT TO SUPPORT IVSC PUBLICATION DEVELOPING AND ESTABLISHING A PROFESSIONAL VALUATION ORGANISATION 16.1 David Faulkner had advised the chairman that the Advisory Forum Working Group was yet to progress the project. 17. IVSC PROFESSIONAL BOARD WORK PLAN 17.1 The Board reviewed its current work plan and discussed possible new items for inclusion The Board discussed whether an update to the survey carried out by the Advisory Forum Working Group in 2012 would help inform its project to develop IPSs. At this stage it felt not. The Board did discuss the low take-up and use of IVSs. Roy Farthing reported that all members of the Australian Property Institute had to attend a risk management module on a regular basis in order to maintain membership. He suggested that the IVSC should consider introducing, through the Member Compliance and Development Programme, an obligation that VPOs should require their members to attend standards update courses on a regular basis The Board was reminded that the Discussion Paper had carried a statement that it would undertake a project to determine the need for a global accreditation. It agreed that the chairman should raise the issue with the Advisory Forum Working Group before it determined how to progress this The Board discussed whether it should add the development of Performance Standards on, for example, working documentation, retention of working papers, etc. to its work plan. Marianna Todorova reminded the Board that early drafts of the Guide to the Audit Process for Professional Valuers had included checklists as an appendix that covered some of this. The Board agreed that this be reviewed and consideration be given to including the development of guidance around performance standards within the Illustrative Examples project. 18. DATE OF NEXT MEETING 18.1 The next meeting of the Professional Board will be held in London on Thursday 26 June March 2014 PB Minutes 7