Polish Valuers Prepare For Revolution!
A packed room of over 160 property professionals attending a Valuation Conference at the Radisson Hotel, Warsaw last month, listened to experts from the UK and Poland warn of the need to understand and advise clients of the impact of International Financial Reporting Standards (IFRS) in relation to property assets appearing in company accounts. The adoption of IFRS by all companies listed on a European stock exchange was made compulsory from the beginning of the year.
The conference hosted jointly by The Royal Institution of Chartered Surveyors (RICS) and The Polish Federation of Valuers' Associations (PFVA) was sponsored and organised by Polish Properties.
Keynote speaker Barry Gilbertson, RICS President and Partner of PricewaterhouseCoopers set the scene by presenting his vision for future of the valuation profession. He warned of the dangers and opportunities that it currently faces.
The RICS President pointed to globalisation, increased levels of cross border economic activity and the emergence of global clients as the drivers of international standards in accounting, banking and valuation. He argued that international valuation standards will improve transparency and so secure sound financial services in the public interest. However whatever the drivers of change in the valuation marketplace, Gilbertson warned that "it is fundamental for survival of professional valuation that the public interest is protected"
Chris Thorne Director of Atis Real and the internationally recognised expert on property valuation for financial reporting explained the impact of IFRS.
The adoption of IFRS is intended to harmonise the accounting practices of listed companies across the European Union. The new rules replace the various domestic accounting standards under which companies have previously prepared their accounts. The effect will be that comparison of companies across national boundaries becomes a great deal easier.
In many cases these international standards could radically change the figures that companies publish for net assets, earnings and return of capital. They could significantly affect the way that companies that own or occupy property are perceived.
The new rules differ significantly from the domestic accounting standards that they supplant. In particular, the most important single innovation of IFRS is to move a step away from the historical cost principle under which accounts have traditionally been prepared. Companies are now given an option. They may carry their long-term property and other assets based on original cost or they may carry them at "fair values": what they are currently worth, normally their market value. In the second case the figures for properties in the accounts will be based on a valuation.
A lively and thought provoking presentation by the UK's leading valuation guru Professor Neil Crosby led to a call for the urgent review of Polish valuation standards and methodology to align them with internationally accepted valuation standards.
His fears were allayed by many of the top Polish professionals present, including Professor Andrzej Hopfer, President of PFVA and Andrzej Kalus, Chairman of The Polish Association of Real Estate Counsellors (www.drn.pl), Professor Ewa Kucharska-Stasiak, Professor Mieczyslaw Prystupa, Jerzy Filipiak, Jerzy Adamiczka, Andrzej Kinast and Malgorzata Cieslak who spoke of the desire and ability of the Polish valuation profession to continue to evolve and change in the interests of international uniformity.
As explained by conference moderator, Chris Grzesik, Chairman of RICS Europe and Managing Director of Polish Properties:
"Ten years ago the Polish valuation standards were state of the art and in conformity with international thinking. Even today there are few countries in Europe with properly drawn up valuation standards. With the introduction of IFRS across the EU those standards now require review and modification. The good news is that the PFVA along with the RICS are still well ahead of the game in terms of their innovative thought and readiness to implement revolutionary change in response to globalisation, client demand and the public interest".