Description

Valuation standards are the foundation of professional services as well as the safeguard of the ethics of practice. In the past three decades, following the increasing of economic globalization, valuation industries in all countries have experienced considerable development. Valuation standards have become a common economic language and an important platform for the dissemination and promotion of the professional philosophy, professional essence and core values of the valuation industry under the endeavor of counterparts around the world. The formulation and implementation of the valuation standards plays an important role in regulating practice of the valuation industry, guaranteeing quality of practice, enhancing the professional image and social creditability of the valuation industry, fostering the industry to better serve the market economy and facilitating international exchanges of the industry. The valuation industry in the PRC was originated from the opening up of country and the need for reform of the economic system. For more than 20 years, the valuation industry of the PRC has sprouted from nothing and from small companies to large companies. It has developed and expanded into an energetic team comprising of over 30,000 certified public valuers (hereinafter referred as “CPV”) and around 3,000 asset valuation institutions. In its development, the valuation industry of the PRC has served in the reform and opening and the market economy. It plays a vital role in, among other aspects, fostering the adjustment on the national economic strategies, deepening the opening up, safeguarding the smooth transfer of property rights, improving reasonable allocation of assets, regulating the order of market economy, and upholding the legitimates interests of all parties in the market. The industry has become an indispensable force of professional services in the market economy of the PRC. Since 1998, the Ministry of Finance of the PRC (MOF) and the China Appraisal Society (CAS) have been focusing on enhancing the creditability of the industry and building up the core competitiveness of the profession with an aim of serving the overall economic and social development. Making full reference to the advanced, international valuation philosophy and based on the years of extensive practical experience of the valuation industry, the MOF and the CAS studied the possibility of formulating a system of valuation standards in the PRC. On top of the organizational framework for standard formulation, the MOF established the Committee for the Asset Valuation Standards while the CAS established the Technical Committee and Advisory Committee for the Asset Valuation Standards. For the methodology of standard formulation, the MOF and the CAS have gathered the efforts of all relevant parties of asset valuation, and, for the procedures of standard formulation, they have regulated different procedures such as initiation, drafting, opinion seeking, review and distribution, laying a solid foundation for the guarantee of the quality of the valuation standards. After more than a decade of dedication, the formulation of the valuation standards has seen substantial progress. Up to 2012, there are 26 valuation principles, including 2 basic principles, 12 specific principles, 4 valuation guidelines and 8 valuation guidance notes, which basically satisfy the need for practice and supervision of the valuation industry. Among which, two basic principles are promulgated by the MOF whereas other principles are promulgated by the CAS. The preliminary dynamic update mechanism for the valuation standards has been established. These principles fully reflect the contents of the valuation profession and the objective demands of the market. Not only including operational requirements of engagements, these principles also include requirements of professional ethics. Not only regulating the practice of valuers, these principles also consider the reasonable requirements of the clients on the contents and format of valuation reports. Not only regulating conventional valuation engagements, these principles also serve the emerging valuation engagements. Not only regulating practices through a single principle, these principles also function through coordination of the system of standards. Not only setting out inherited regulations, these principles also include innovative requirements. The implementation of the valuation standards in the PRC offers valuation practitioners a set of more comprehensive and unified standards, enables the supervision departments to study and judge the quality of a practice based on a set of criteria, and enables the users of valuation reports to understanding and use valuation conclusions based on the valuation standards. Regulated practices, effective supervision and reasonable use have contributed to the improvement of the overall ability to serve and the social creditability of the industry, which in turn consolidates the position of the services by the valuation industry in market economy. The valuation standards of the PRC focus on referring to the experience of the formulation of international valuation standards and combine it with conditions of the PRC to make innovative development. In over 10 years, while connecting with the international community, the PRC has been innovatively formulating principles that accommodate the practice needs in the PRC. The formulation of the valuation standards in the PRC has enhanced the international position and the professional image of the valuation industry in the PRC. During the formulation of the valuation standards, heads and experts of relevant departments including the MOF, the State-owned Assets Supervision and Administration Commission, the China Securities Regulatory Commission, the China Banking Regulatory Commission, the National Audit Office, the State Intellectual Property Office, the National Copyright Administration, the State Forestry Administration, the State Administration for Industry and Commerce have coordinated the relationship between the principles and the relevant policies and regulations and facilitated the implementation of the principles, reflecting their full regard, care and support of the valuation industry. Experts from various universities including Renmin University of China, Central University of Finance and Economics, Xiamen University, Dongbei University of Finance and Economics, Zhongnan University of Economics and Law, Agricultural University of Hebei and Peking University have been participating in the drafting, discussion and consultation of all principles for a long time, exerting great efforts in their profession. Experts from a number of international and national valuation organizations including the International Valuation Standards Council (IVSC), the World Association of Valuation Organisations (WAVO), Appraisal Foundation (AF), the Royal Institution of Chartered Surveyors (RICS), the International Property Tax Institute (IPTI), the International Association of Consultants, Valuators and Analysts (IACVA), the Canadian Institute of Chartered Business Valuators (CICBV), Municipal Property Assessment Corporation (MPAC) in Ontario, Canada have offered selfless assistance to the formulation of the valuation standards in the PRC. The standard formulation experiences of several international and national valuation organizations are proven useful inspirations and references for formulating the valuation standards in the PRC. Practitioners in the valuation industry in the PRC have contributed wisdom of their profession, spared no effort, and give their insights for the formulation of the valuation standards, leading to the constant development and improvement of the system of valuation standard. We hereby express our sincere gratitude to the personnel from all sectors for their care and support of the formulation of the valuation standards. To display the fruit of the formulation of the valuation standards to all social sectors and fellow foreigners, the CAS has published the compilation of the standards for a number of times. In 2013, the CAS published the Valuation Standards 2013 while reaching a milestone in the formulation of the system of valuation standards in the PRC. Meanwhile, to facilitate the foreigner’s understandings of the valuation standards of the PRC and to foster international exchanges and studies of the valuation standards, Liu Ping, the vice president and secretary-general of the CAS, proposed the translation of the standards from Chinese into English. Liu Ping was responsible for coordinating and overseeing the translation while Han Liying, the deputy secretary-general of the CAS, was responsible for the organization and implementation. The translation was jointly completed by the CAS and GCA Professional Services Group (GCA) in Hong Kong. In the course of translation, we have received enormous support and help from different experts and scholars, and the English translation of every principle is well refined and polished by experts and scholars. Shao Ronghua, Chen Minghai, Yu Yue, Zhou Jing, Sun Jianbo of the CAS and K K Ip, the managing director, and Brian Shiu Kai Cheong, the director of the GCA have contributed considerable efforts for the translation of the principles, while experts including Jiang Wei, Chen Shaoyu, Liu Yunbo, Li Dahan, Zhao Qiang, Zhu Jun have reviewed the translation and provided valuable suggestions and recommendations. China Appraisal Society September 2013

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