From Roadrage to Roadmap: Functional Approach to Valuation Standard-Setting and Professional Valuation Standards: The Case of Russia
Presented at the 44th IOV National Seminar concurrent with the 6th International WAVO Congress 27-29 December, 2013 Chennai, India
31 Pages Posted: 5 Jan 2014
Date Written: January 5, 2014
This Paper presented at the 6th International WAVO Congress in Chennai Dec. 27-29, 2013, takes a look at the latest legal initiatives of the Russian Government (the so-called "Roadmap" aimed at improving the state of valuation activities in the country) that call for the development of a clear-cut valuation policy on the part of the Government. The notion of a Valuation policy, still being a neologism in the government regulatory toolkit, we discuss the essential building blocks for such a policy and outline its different application modalities and objectives in areas as diverse as valuation for financial reporting and mortgage lending purposes. In the latter context the parameters of controlled ("tight") valuation policy based on the Mortgage Lending Value concept are discussed.
In general, any government policy should be objectives-based. Consequently, we attempt to discuss the ends of such a policy for valuation - for which we draw on the functional approach implicit in the Functional Finance specialism, which lends the Paper its title. An attempt is made at a brief historical analysis of the valuation profession in Russia to categorize the different institutional periods it underwent and understand the exigencies of the moment that led off to the development of the Roadmap. In this analysis, entertaining parallels are drawn with the evolution of the respective monetary policies. In particular, the current self-regulatory period of the valuation industry, to which the Roadmap spells the end, is likened to the unregulated monetary period in the pre Civil War US.
One indispensible building component of any valuation policy is presented to be a well-designed regime for Valuers implemented through the medium of Professional Standards. Russia is probably the first country to have developed drafts of the Professional standards for Valuers for adoption at the federal level - only months after the eponymous initiative by the International Valuation Standards Council (IVSC) has been unveiled. Appendix to the Paper contains some English-translated excerpts from the Roadmap White Paper itself.
Keywords: Russian Valuation Profession, Valuer Professional Standards, valuation policy, functional finance, Mortgage lending value
JEL Classification: D46, G28
Suggested Citation: Suggested Citation