CIRCULAR 158/2014 / TT-BTC PROMULGATING THE STANDARDS FOR APPRAISING VIETNAM'S PRICE NUMBER 01, 02, 03 AND 04 issued by the Minister of Finance

CIRCULARS

PROMULGATING VIETNAM'S PRICE APPRAISAL STANDARDS NO. 01, 02, 03 AND 04

Pursuant to the Law on Prices No. 11/2012 / QH13 dated June 20, 2012;

Pursuant to the Government's Decree No. 89/2013 / ND-CP of August 6, 2013 detailing the implementation of a number of articles of the Law on Prices on price appraisal;

Pursuant to Decree No. 215/2013 / ND-CP dated December 23, 2013 of the Government defining the functions, tasks, powers and organizational structure of the Ministry of Finance;

At the proposal of Director of Price Management Department,

The Minister of Finance promulgates a Circular to promulgate Vietnam valuation standards No. 01, 02, 03 and 04.

Article 1. To promulgate together with this Circular 04 (four) Vietnam appraisal standards with the following numbers and names:

- Vietnam valuation standard No. 01 - Ethical rules for practicing valuation;

- Vietnam valuation standard No. 02 - Market value as a basis for price appraisal;

- Vietnam valuation standard No. 03 - Non-market value as a basis for price appraisal;

- Vietnam valuation standard No. 04 - Economic principles governing price appraisal.

Article 2. Effect

1. This Circular takes effect from January 1, 2015.

2. Vietnam's valuation standards include: Standard No. 01 - Market value as a basis for asset price appraisal, Standard No. 03 - Ethical rules of professional practice of asset price appraisal issued together with Decision No. 24/2005 / QD-BTC of April 18, 2005, promulgating 03 standards of appraisal of Vietnamese prices; Standard No. 02 - Non-market value as a basis for asset price appraisal, Standard No. 06 - Economic principles governing asset price appraisal activities issued together with Decision No. 77/2005 / QD-BTC dated 01/11/2005 of the Minister of Finance on promulgating 03 standards of Vietnam valuation (phase 2) expires from the effective date of this Circular.

Article 3. Organization of implementation

1. The Department of Price Management shall assume the prime responsibility for, and coordinate with relevant agencies in, directing, guiding and inspecting the implementation of the provisions of the Criteria for appraisal of prices attached to this Circular and legal documents. relevant laws.

2. In the course of implementation, if any problems arise, the units are requested to report them to the Ministry of Finance for guidance in settling, amending and supplementing them accordingly.

VIETNAM PRICE APPRAISING STANDARD SYSTEM

Vietnam price appraisal standard No. 01

Ethical rules of valuation practice

(Symbol: VĐGVN 01)

(Issued together with Circular No. 158/2014 / TT-BTC dated October 27, 2014 of the Minister of Finance)

I. GENERAL PROVISIONS

1. Scope of regulation: This standard provides for the ethical rules governing price appraisers and price appraisers in the course of practicing valuation.

2. Subjects of application: This standard applies to practicing price appraisers (below collectively referred to as appraisers), price-appraising enterprises, other organizations and individuals conducting appraisal activities. valuation in accordance with the Law on Prices and other provisions of relevant laws.

3. Customer valuation and the third party using the valuation results under the signed valuation contract must have the necessary knowledge about the rules specified in this standard.

II. STANDARD CONTENT

1. Appraisers and price-appraising enterprises must respect and strictly abide by the provisions of the Price Law, guiding documents and other relevant laws in the process of practicing valuation.

Appraisers must be people with good ethical, integrity, honesty and objectivity when conducting price appraisal, meeting the standards of price appraisers specified in the Law on Prices and guiding documents. .

2. Appraisers who sign reports on results of price appraisal, certificates of price appraisal must be responsible before law, before the representatives at law, the General Directors or Directors of enterprises appraising prices of appraisal results. price.

The legal representative, General Director or Director of the valuation enterprise is ultimately responsible for the truthfulness, truthfulness and objectivity of the result of price appraisal before law, customers and third parties have The related price is determined by the customer and is agreed by the enterprise in the valuation contract.

3. Ethical standards and professional qualifications of appraisal of prices include:

a) Independence;

b) Integrity;

c) Objectivity;

d) Security;

d) Publicity and transparency;

e) Professional competence and prudence;

g) Occupation status;

h) Comply with professional standards.

4. Independent

- Independence is the basic practice principle of business valuation and appraisers.

- In the course of price appraisal, appraisers and price appraisal enterprises must ensure the independence of professional operations, really not be dominated or affected by any material or mental benefits. affecting the truthfulness and objectivity of price appraisal activities and results of price appraisal.

- Appraisers, valuation enterprises are not allowed to receive price appraisal in cases where valuation is not allowed under the Law on Prices and guiding documents. In the course of price appraisal, if there is a limit on independence, the appraisers or valuation enterprises must find ways to overcome this limitation. In case it cannot be overcome, the appraisers and valuation enterprises must clearly state this restriction in the Report on results of price appraisal or refuse to perform the price appraisal.

- When reviewing reports on valuation results of another appraisers, the appraisers must comment independently, objectively and conclude with or without consensus with part or all of the contents of the newspaper. fox.

5. Integrity

- Appraisers must be frank, honest and have clear opinions when conducting price appraisal.

- Appraisers must be honest about their qualifications, experience and professional competence; must ensure that they and their assistants and employees strictly comply with the provisions of the law on price appraisal and the system of Vietnam price appraisal standards when conducting price appraisal.

- Appraisers must refuse to conduct price appraisal if deeming that they are ineligible to perform price appraisal or if being governed by constraints that may falsify results of price appraisal.

6. Objective

- Appraisers must be fair, respect the truth and not be biased or biased in collecting documents and using documents to analyze impact factors when evaluating prices.

- Appraisers, valuation enterprises are not allowed to conduct the price appraisal work when the opinions, appraisal conclusions and valuation results have been intentionally set forth.

- Appraisers and valuation enterprises must verify information and data provided by customers to confirm the suitability or non-conformity of such information and data. In cases where the examination of information and data is restricted, the appraisers must clearly state such limitations in the price appraisal reports and price appraisal certificates.

- Appraisers and valuation enterprises must not conduct appraisal based on hypothetical conditions without strict, feasible and plausible arguments.

7. Privacy

- Appraisers, valuation enterprises must not disclose information about dossiers, customers appraising prices and assets to be appraised without the consent of customers of valuation or not allowed by law. allowed. Information about dossiers, customers appraising prices and assets to be appraised are information that has not been widely published related to customers and customers' valuation assets provided by customers and by businesses. Appraisal firms collected during the price appraisal process.

- Appraisers and valuation enterprises have the responsibility to ask other individuals involved in the price appraisal process and store the valuation records to respect the confidentiality principle.

8. Publicity and transparency

- All documents showing the legality and technical characteristics of the property and showing the results of price appraisal must be presented fully and clearly in the report on the result of price appraisal.

- The report on the result of price appraisal must clearly state the job-binding conditions, the scope of work, the restrictive conditions and assumptions set out by the appraisers.

- Appraisers and valuation enterprises must disclose restrictive conditions and remedial conditions agreed upon with customers in the report on valuation results.

- Prices of price appraisal services comply with agreements between price appraisal enterprises and customers of price appraisal on the basis of grounds set by the Price Law and guiding documents and stated in price appraisal contracts. ; In case of bidding for price appraisal services, the provisions of bidding law applicable to consultancy service bidding packages shall apply. Price appraisal businesses issue and list price appraisal service

9. Professional competence and prudence

- Appraisers must perform the valuation work with full necessary professional competence, diligent working spirit, prudence and full consideration of collected data before making official comments. with the General Director, Director of Enterprise Valuation.

- Appraisers must constantly improve their knowledge and professional skills as well as experience in practical activities, in the legal environment. Annually, appraisers are obliged to participate in fostering professional knowledge on price appraisal organized by agencies and organizations permitted to organize.

- The price appraisal enterprises shall encourage, arrange and create conditions for appraisers to participate in fostering professional knowledge and skills according to regulations, and at the same time apply technical advances to appraisers. meet the requirements of valuation work, ensuring to provide the best price appraisal service to customers.

- Business valuation should take measures to ensure that those who do the professional work at the business must be trained, fostered and supervised appropriately.

- The price appraisal enterprises are responsible for purchasing professional liability insurance for price appraisal activities or setting up the professional risk reserve fund for valuation.

10. Occupation status

- Business valuation and appraisers must cultivate and protect professional reputation, must not take acts that reduce the prestige of professional valuation, compete for customers in the form of preventing, threatening, entice, bribes, and other unfair competition acts.

- Enterprise valuation and appraisers have the right to participate in domestic and foreign professional organizations on valuation as prescribed by law.

11. Compliance with professional standards

- Appraisers and valuation enterprises must perform the price appraisal work according to the techniques and professional standards prescribed in the system of Vietnam price appraisal standards and other relevant law provisions. current authorities.

- Appraisers and valuation enterprises have the right to hire consultancy organizations and individuals that fully meet the conditions prescribed by current law to provide consultancy and draw professional conclusions in service of valuation activities.

12. The content of ethical practice of asset price appraisal specified in this Standard must be specified and reflected in the process of building process and implementing quality control of appraisal activities. price of enterprise valuation./.

VIETNAM PRICE APPRAISING STANDARD SYSTEM

Vietnam price appraisal standard No. 02

Market value as a basis for valuation

(Symbol: VĐGVN 02)

(Issued together with Circular No. 158/2014 / TT-BTC dated October 27, 2014 of the Minister of Finance)

VIETNAM PRICE APPRAISING STANDARD SYSTEM

Vietnam price appraisal standard No. 03

Non-market value as a basis for valuation

(Symbol: VNR 03)

(Issued together with Circular No. 158/2014 / TT-BTC dated October 27, 2014 of the Minister of Finance)

I. GENERAL PROVISIONS

1. Scope of regulation: This standard provides for non-market value of assets and the application of non-market value when conducting price appraisal.

2. Subjects of application: Practicing price appraisers (below collectively referred to as appraisers), price-appraising enterprises, other organizations and individuals conducting price appraisal activities according to the provisions of the Law Price and other provisions of relevant laws.

II. STANDARD CONTENT

1. Asset value basis may be either a market value basis or a non-market value basis. The estimated value of assets is based on the non-market value and is determined by the approaches prescribed by the Vietnam Valuation Standards system.

2. Non-market value is the estimated price of an asset at the time and place of valuation, not reflecting market value but based on economic-technical characteristics, functions and utilities of assets, benefits they bring in their use, their value to some particular buyers, their value when trading under limited conditions, their value for a number of valuation purposes. Special values ​​and values ​​do not reflect other market values. Non-market values ​​include: the value of assets required to be sold, special values, investment values, taxable values ​​or other values, specifically:

a) The value of assets required to be sold is the total proceeds from the sale of assets in the condition that the transaction time to sell assets is too short compared to the normal time required to conduct purchase and sale transactions at prices. market management, sellers are not ready to sell or sell involuntarily. The prices in such asset purchases are called the value of the assets that must be sold, not the market value.

b) Special value is the value of an asset with special properties that only attracts the attention of special buyers or special users. Special value can be formed by location, nature, economic-technical characteristics, legal factors and other special factors of an asset. Special value includes: The value of assets in use, the value of assets with limited market, the value of special-use assets and other special values.

Asset value in use is a non-market value that is considered from the perspective of a separate user of a property for a particular purpose, thus not related to the market. When conducting valuation of this type of asset, the appraiser focuses primarily on the aspect of participation, the contribution of the property to the operation of a production line, an enterprise, or another property not considered. in terms of the best, optimal value of the property or the amount of money it can get from selling it on the market.

Restricted market value is the value of an asset due to its uniqueness, or due to market conditions, or due to other factors which make it less likely to be sought by customers, at a at some point. The important distinguishing feature of this asset is not its inability to sell on the public market, but to sell it requires a longer marketing process, costly and time-consuming than that. other properties.

c) Investment value is the value of an asset to investors according to the defined investment objectives.

Investment value is a subjective concept related to specific assets for an individual investor with defined investment objectives and / or criteria. The difference between the investment value and the market value of an asset is the driving force for investors to participate in the market.

d) The value to calculate the tax is the value based on the provisions of law related to the evaluation of property value to calculate the payable tax.

3. When applying the non-market value basis, the appraisers need to name the specific types of non-market value to be applied and give specific grounds and arguments, including:

- Special characteristics of the property valuation;

- Special buyers, investors;

- Transactions in limited markets, must be sold;

- Value for special purposes such as tax purposes./.

VIETNAM PRICE APPRAISING STANDARD SYSTEM

Vietnam valuation standard No. 04

Economic principles governing price appraisal

(Symbol: VNR 04)

(Issued together with Circular No. 158/2014 / TT-BTC dated October 27, 2014 of the Minister of Finance)

I. GENERAL PROVISIONS

1. Scope of regulation: This standard prescribes the principles of determining the value of assets and guides the principles when conducting price appraisal.

2. Subjects of application: Practicing price appraisers (below collectively referred to as appraisers), price-appraising enterprises, other organizations and individuals conducting price appraisal activities according to the provisions of the Law Price and other provisions of relevant laws.

II. STANDARD CONTENT

The value of an asset is formed by the impact of many factors such as use value, scarcity, demand for solvency. When conducting price appraisal, appraisers need to study and apply the following basic principles to analyze and evaluate the factors affecting the value formation process of assets, from which to draw results. Comment on the value of the property.

1. Principle of best use and most effective

The best and most effective use of an asset is to achieve the maximum legal, technical, financial, and financially useful use in practically appropriate socio-economic situations and bring the highest value for the property.

An actual used asset does not necessarily represent the best and most effective use of that asset.

2. Principle of supply - demand

The value of an asset is determined by the supply and demand relationship for that asset in the market. At the same time, the value of that asset also affects supply and demand of the asset. The value of assets changes in direct proportion to demand and is inversely proportional to the supply of assets. Factors of physical and socio-economic characteristics that are different from those of other assets are also reflected in the supply - demand and value of assets.

3. Principles of change

The value of an asset changes with changes in its constituent factors and its value.

The value of assets is also formed in the process of continuous change reflecting a series of causal relationships between the factors affecting value. The factors that influence values ​​are always changing. Therefore, in appraising asset prices, appraisers must grasp the causal relationship between the factors in a dynamic state, must analyze the change process to determine the best and effective use of assets. most fruit.

4. The principle of substitution

In cases where two or more assets are interchangeable during their use, the value of those properties is determined by the mutual influence of one property on the other.

When two assets are equally useful, the asset that offers the lowest price will sell first. The upper limit of the value of the property tends to be set by the cost of purchasing an equivalent replacement property, provided that there is no excessive delay affecting the replacement. A cautious buyer will not pay a price higher than the cost of buying a replacement property in the same market and at the same time.

5. Principle of balance

When the constituent elements of an asset achieve equilibrium, the asset achieves maximum profitability or the highest usefulness. Therefore, in order to estimate the best and most effective use of assets, an analysis of the balance of the constituent elements of the assets under evaluation is needed.

6. Principles of income increase or decrease

The total income on the increase in investment will increase continuously to a certain point, then even though the investment continues to increase, that additional income will decrease gradually.

7. Principles of income distribution

The total income generated from a combination of factors of the production process (land, capital, labor, management) and can be distributed to each of these factors. If the distribution is made according to the corresponding principle, the remaining income after being distributed to capital, labor and management will represent the value of land.

8. Principles of contribution

The extent to which each division of an asset contributes to its total income from the total asset affects its total value.

The value of an actor or component of an asset depends on how much the absence of that actor reduces the value of the entire asset, that is, the amount of value it contributes to. What is the whole value? When considering the value of a component asset, the appraiser needs to consider it in relation to the overall asset.

This principle is the basic principle in considering the feasibility of additional investment in assets when appraisers determine the best and most effective use of assets.

9. Appropriate principle

Assets need to be adapted to their environment in order to achieve maximum profitability or highest usefulness. Therefore, the appraiser must analyze whether the property is environmentally appropriate when the appraiser determines the best and most effective use of the property.

10. Principles of competition

Excessive high profits will promote competition, and at the same time, excessive competition can reduce profits and may eventually be no longer profitable. For assets, the competitive relationship is also observed between assets and between one property and another. When conducting valuation, the appraiser should consider and assess the impact of competition on the income of the asset, especially when using the income-based approach to determine the value of the asset.

11. Principles for estimating future benefits

The value of an asset can be determined by estimating future profitability.

The value of an asset is also influenced by the market participants' expected market share, and the predictable changes in this factor also affect the value.

The estimation of the value of an asset is always based on future prospects, the expected benefits received from the buyer 's right to use the property.