Current rural valuation practice : a survey of valuers and agribusiness managers on farm management and sustainable rural land use

Over the past 20 years the nature of rural valuation practice has required most rural valuers to undertake studies in both agriculture (farm management) and valuation, especially if carrying out valuation work for financial institutions. The additional farm financial and management information obtained by rural valuers exceeds that level of information required to value commercial, retail and industrial by the capitalisation of net rent/profit valuation method and is very similar to the level of information required for the valuation of commercial and retail property by the Discounted Cash Flow valuation method. On this basis the valuers specialising in rural valuation practice have the necessary skills and information to value rural properties by an income valuation method, which can focus on the long term environmental and economic sustainability of the property being valued. This paper will review the results of an extensive survey carried out by rural property valuers in Australia, in relation to the impact of farm management on rural property values and sustainable rural land use. A particular focus of the research relates to the increased awareness of the problems of rural land degradation in Australia and the subsequent impact such problems have on the productivity of rural land. These problems of sustainable land use have resulted in the need to develop an approach to rural valuation practice that allows the valuer to factor the past management practices on the subject rural property into the actual valuation figure. An analysis of the past farm management and the inclusion of this data into the valuation methodology provides a much more reliable indication of farm sustainable economic value than the existing direct comparison valuation methodology.

Current rural valuation practice : a survey of NSW valuers and agribusiness managers

Despite the advances that have been made in relation to the valuation of Commercial, Industrial and retail property, there has not been the same progress in relation to the valuation of rural property. Although number of rural property valuations also require the valuer to carry out a full analysis of the economic performance of the farming operations, as well as the long term environmental viability of the farm, this information is rarely used to assess the value of the property, nor is it even used for a secondary valuation method. Over the past 20 years the nature of rural valuation practice has required most rural valuers to undertake studies in both agriculture (farm management) and valuation, especially if carrying out valuation work for financial institutions. The additional farm financial and management information obtained by rural valuers exceeds that level of information required to value commercial, retail and industrial by the capitalisation of net rent/profit valuation method and is very similar to the level of information required for the valuation of commercial and retail property by the Discounted Cash Flow valuation method. On this basis the valuers specialising in rural valuation practice have the necessary skills and information to value rural properties by an income valuation method. Although the direct comparison method of valuation has been sufficient in the past to value rural properties the future use of the method as the main valuation method is limited and valuers need to adopt an income valuation method as at least a secondary valuation method to overcome the problems associated with the use of direct comparison as the only rural property valuation method, especially in view of the impact that farm technical, financial and environmental .management can have on rural property values. This paper will review the results of an extensive survey carried out by rural property valuers and agribusiness managers in NSW, in relation to the impact of farm management on rural property values and rural property valuation practice.

The use of income valuation methods to value rural property

Despite the advances that have been made in relation to the valuation of commercial, industrial and retail property, there has not been the same progress in relation to the valuation of rural property. Although the majority of rural property valuations also require the valuer to carry out a full analysis of the economic performance of the farming operations, this information is rarely used to assess the value of the property, nor is it even used for a secondary valuation method. Over the past 20 years the nature of rural valuation practice has required rural valuers to undertake studies in both agriculture (farm management) and valuation, especially if carrying out valuation work for financial institutions. The additional farm financial information obtained by rural valuers exceeds that level of information required to value commercial, retail and industrial by the capitalisation of net rent/profit valuation method and is very similar to the level of information required for the valuation of commercial and retail property by the Discounted Cash Flow valuation method. On this basis the valuers specialising in rural valuation practice should have the necessary skills and information to value rural properties by an income valuation method. Although the direct comparison method of valuation has been sufficient in the past to value rural properties the future use of the method as the main valuation method is limited and valuers need to adopt an income valuation method as at least a secondary valuation method to overcome the problems associated with the use of direct comparison as the only rural property valuation method. This paper will review the results of an extensive survey carried out by rural property valuers in New South Wales (NSW), Australia, in relation to the impact of farm management on rural property values and rural property income potential.

Adam Smith's Dinner

The Future of Financial Regulation is an edited collection of papers presented at a major conference at the University of Glasgow in Spring 2009. It draws together a variety of different perspectives on the international financial crisis which began in August 2007 and later turned into a more widespread economic crisis following the collapse of Lehman Brothers in the Autumn of 2008. Spring 2009 was in many respects the nadir since valuations in financial markets had reached their low point and crisis management rather than regulatory reform was the main focus of attention. The conference and book were deliberately framed as an attempt to re-focus attention from the former to the latter. The first part of the book focuses on the context of the crisis, discussing the general characteristics of financial crises and the specific influences that were at work during this time. The second part focuses more specifically on regulatory techniques and practices implicated in the crisis, noting in particular an over-reliance on the capacity of regulators and financial institutions to manage risk and on the capacity of markets to self-correct. The third part focuses on the role of governance and ethics in the crisis and in particular the need for a common ethical framework to underpin governance practices and to provide greater clarity in the design of accountability mechanisms. The final part focuses on the trajectory of regulatory reform, noting the considerable potential for change as a result of the role of the state in the rescue and recuperation of the financial system and stressing the need for fundamental re-appraisal of business and regulatory models. This informative book will be of interest to financial regulators and theorists, commercial and financial law practitioners, and academics involved in the law and economics of regulation.

A select and annotated bibliography of nonprofit taxation

It seems likely that the Industry Commission Inquiry on Charitable Organisations will include a reference to examine the state of taxation and charities. There will no doubt be discussions on the taxation benefits enjoyed by charities. These benefits include not only the exemption from being liable for income tax and enjoying the status of being a "deductible body" for the purpose of gifts, but also fringe benefits tax, sales tax, land tax, stamp duty, financial institutions duty, local government rates and charges as well as electricity, gas, telephone and motor vehicle concessions.

Will Queensland tort reform change valuation practice and valuers liability

It has been common practice over past property boom and bust cycles in Australia for financial institutions and property owners who have suffered a loss in the property downturn to sue valuers for negligence. Damages claimed are based on the price differential between the valuation at or nearing the peak of the market and the subsequent sale in the market downturn. However, the context of valuers liability has become increasingly complex as a result of statutory reforms introduced in response to the Review of the Law of Negligence Final Report 2002), in particular the introduction of Civil Liability Acts introducing proportionate liability provisions. Legislative reforms have had some positive outcomes for Valuers, however valuers need to continue to maintain high ethical standards, independence and professionalism in valuation practice.

International tax cooperation in the Post-GFC era

Over the last five years we have observed the fallout from the global financial crisis (GFC). International cooperation and jointly adopted policies have dominated many of the solutions to the problems which have arisen. Initially, many nations in response to the GFC, implemented a two pronged short term solution by undertaking fiscal intervention and delivering rescue packages aimed at first, bailing out financial institutions and second, preventing or minimising the impact of a recession. Both programs involved large amounts of domestic spending. It was difficult in early 2007 to foresee the reduction that nations were about the face in domestic revenue collected. Five years on, not only have the first line effects of the GFC reduced the revenue raised by governments around the world, but the consequential costs associated with the rescue packages have also depleted domestic revenue bases. The response by stakeholders has been to attempt to secure domestic revenue bases through fiscally sustainable measures. Domestic sovereignty allows the levying of taxes as a nation chooses. However, rather than raise domestic taxes, revenue may also be increased by stemming the flow of income and capital to low and no-tax jurisdictions. The intervening five-year period since the GFC allows a unique insight into the response by nations and international organisations to tax evasion, tax avoidance and aggressive tax competition through the cross border flows of capital and the resulting affect that the GFC has had on international tax cooperation. By investigating the change in the international tax landscape over the last five years, which reveals the work done by stakeholders in developing fiscally responsible responses to the problems that have arisen, it may be possible to predict the trajectory of the international tax landscape over the next five years.

Standardisation of plant and machinery valuation practices in Malaysia

Plant and machinery valuation is important to every company.s annual financial reporting. It is reported under the non-current assets section, and the valuers are generally employed to provide the up to date valuation of the non-current assets valuation such as property, plant and equipment that can make up to 80% of the total assets of a company. The valuation of plant and machinery is also important for other purposes such as securing loan facilities, sales, takeover, insurance and auction. The application of 2005 International Financial Reporting Standard (IFRS) has a subsequent impact on the financial sector, as a whole. The accountants have to choose between the Historical Cost approach and Market Value approach in determining the value of the client.s assets. In Malaysia, the implementation of IFRS has a domino effect on the financial system, especially for plant and machinery valuation for financial reporting. The comparison data for plant and machinery valuation is limited unlike land and building valuation. The question of Malaysian valuer.s ability to comply with the IFRS standard keeps rising every day, not just to the accountants, but also other related parties such as financial institutions, government agencies and the clients. This is happening because of different interpretations of premise of value for plant and machinery, as well as methods been used and differences in standards of reporting among the valuers conducting plant and machinery valuation. The root of the problem lies in the lack of practical guidelines governing plant and machinery valuation practices and different schools of thought among the valuers. Some follow the United Kingdom.s RICS guidelines, whilst some valuers are more comfortable with the United State.s USPAP rules, especially on the premise of value. This research is to investigate the international best practices of plant and machinery valuation and to establish the common valuation concept, awareness and application of valuation methodology and valuation process for plant and machinery valuation in Malaysia. This research uses a combination of the qualitative and quantitative research approach. In the qualitative approach, the content analyses were conducted from the international practices and current Malaysian implementation of plant and machinery valuation. A survey (quantitative approach) via questionnaire was implemented among the registered and probationary valuers in Malaysia to investigate their understanding and opinion relating to plant and machinery valuation based on the current practices. The significance of this research is the identification of international plant and machinery practices and the understanding of current practices of plant and machinery valuation in Malaysia. It is found that issues embedding plant and machinery valuation practices are limited numbers of resources available either from scholars or practitioner. This is supported by the general finding from the research survey that indicates that there are immediate needs for practical notes or guidelines to be developed and implemented to support the Malaysian valuers practising plant and machinery valuation. This move will lead to a better understanding of plant and machinery valuation, reducing discrepancies in valuation of plant and machinery and increased accuracy among practising valuers.

Arm’s length pricing and multinational banks : an old fashioned approach in a modern world

In “Arm’s Length Pricing and Multinational Banks: An Old Fashioned Approach in a Modern World”, Kerrie Sadiq, describes the high level of integration of multinational financial institutions and argues that treating each element within a given operation as a separate entity for transfer pricing purposes is not economically or legally realistic. She proposes instead formulary apportionment as a device for managing this complexity.

The IKBALS project: multi-modal reasoning in legal knowledge based systems

In attempting to build intelligent litigation support tools, we have moved beyond first generation, production rule legal expert systems. Our work integrates rule based and case based reasoning with intelligent information retrieval. When using the case based reasoning methodology, or in our case the specialisation of case based retrieval, we need to be aware of how to retrieve relevant experience. Our research, in the legal domain, specifies an approach to the retrieval problem which relies heavily on an extended object oriented/rule based system architecture that is supplemented with causal background information. We use a distributed agent architecture to help support the reasoning process of lawyers. Our approach to integrating rule based reasoning, case based reasoning and case based retrieval is contrasted to the CABARET and PROLEXS architectures which rely on a centralised blackboard architecture. We discuss in detail how our various cooperating agents interact, and provide examples of the system at work. The IKBALS system uses a specialised induction algorithm to induce rules from cases. These rules are then used as indices during the case based retrieval process. Because we aim to build legal support tools which can be modified to suit various domains rather than single purpose legal expert systems, we focus on principles behind developing legal knowledge based systems. The original domain chosen was theAccident Compensation Act 1989 (Victoria, Australia), which relates to the provision of benefits for employees injured at work. For various reasons, which are indicated in the paper, we changed our domain to that ofCredit Act 1984 (Victoria, Australia). This Act regulates the provision of loans by financial institutions. The rule based part of our system which provides advice on the Credit Act has been commercially developed in conjunction with a legal firm. We indicate how this work has lead to the development of a methodology for constructing rule based legal knowledge based systems. We explain the process of integrating this existing commercial rule based system with the case base reasoning and retrieval architecture.

Audit fees and asset securitization risks

The thesis investigates “where were the auditors in asset securitizations”, a criticism of the audit profession before and after the onset of the global financial crisis (GFC). Asset securitizations increase audit complexity and audit risks, which are expected to increase audit fees. Using US bank holding company data from 2003 to 2009, this study examines the association between asset securitization risks and audit fees, and its changes during the global financial crisis. The main test is based on an ordinary least squares (OLS) model, which is adapted from the Fields et al. (2004) bank audit fee model. I employ a principal components analysis to address high correlations among asset securitization risks. Individual securitization risks are also separately tested. A suite of sensitivity tests indicate the results are robust. These include model alterations, sample variations, further controls in the tests, and correcting for the securitizer self-selection problem. A partial least squares (PLS) path modelling methodology is introduced as a separate test, which allows for high intercorrelations, self-selection correction, and sequential order hypotheses in one simultaneous model. The PLS results are consistent with the main results. The study finds significant and positive associations between securitization risks and audit fees. After the commencement of the global financial crisis in 2007, there was an increased focus on the role of audits on asset securitization risks resulting from bank failures; therefore I expect that auditors would become more sensitive to bank asset securitization risks after the commencement of the crisis. I find that auditors appear to focus on different aspects of asset securitization risks during the crisis and that auditors appear to charge a GFC premium for banks. Overall, the results support the view that auditors consider asset securitization risks and market changes, and adjust their audit effort and risk considerations accordingly.

Aligning off-balance sheet risk, on-balance sheet risk and audit fees: a PLS path modelling analysis

This study focuses on using the partial least squares (PLS) path modelling technique in archival auditing research by replicating the data and research questions from prior bank audit fee studies. PLS path modelling allows for inter-correlations among audit fee determinants by establishing latent constructs and multiple relationship paths in one simultaneous PLS path model. Endogeneity concerns about auditor choice can also be addressed with PLS path modelling. With a sample of US bank holding companies for the period 2003-2009, we examine the associations among on-balance sheet financial risks, off-balance sheet risks and audit fees, and also address the pervasive client size effect, and the effect of the self-selection of auditors. The results endorse the dominating effect of size on audit fees, both directly and indirectly via its impacts on other audit fee determinants. By simultaneously considering the self-selection of auditors, we still find audit fee premiums on Big N auditors, which is the second important factor on audit fee determination. On-balance-sheet financial risk measures in terms of capital adequacy, loan composition, earnings and asset quality performance have positive impacts on audit fees. After allowing for the positive influence of on-balance sheet financial risks and entity size on off-balance sheet risk, the off-balance sheet risk measure, SECRISK, is still positively associated with bank audit fees, both before and after the onset of the financial crisis. The consistent results from this study compared with prior literature provide supporting evidence and enhance confidence on the application of this new research technique in archival accounting studies.

Aligning off-balance sheet risk, on-balance sheet risk and audit fees: a PLS path modelling analysis

This study focuses on using the partial least squares (PLS) path modelling methodology in archival auditing research by replicating the data and research questions from prior bank audit fee studies. PLS path modelling allows for inter-correlations among audit fee determinants by establishing latent constructs and multiple relationship paths in one simultaneous PLS path model. Endogeneity concerns about auditor choice can also be addressed with PLS path modelling. With a sample of US bank holding companies for the period 2003-2009, we examine the associations among on-balance sheet financial risks, off-balance sheet risks and audit fees, and also address the pervasive client size effect, and the effect of the self-selection of auditors. The results endorse the dominating effect of size on audit fees, both directly and indirectly via its impacts on other audit fee determinants. By simultaneously considering the self-selection of auditors, we still find audit fee premiums on Big N auditors, which is the second important factor on audit fee determination. On-balance-sheet financial risk measures in terms of capital adequacy, loan composition, earnings and asset quality performance have positive impacts on audit fees. After allowing for the positive influence of on-balance sheet financial risks and entity size on off-balance sheet risk, the off-balance sheet risk measure, SECRISK, is still positively associated with bank audit fees, both before and after the onset of the financial crisis. The consistent results from this study compared with prior literature provide supporting evidence and enhance confidence on the application of this new research technique in archival accounting studies.