The Ministry of Finance discussed the analysis of regulatory impact in the field of valuation activities

The Ministry of Finance discussed the analysis of regulatory impact in the field of valuation activities

On November 16, 2021, a public discussion of the analysis of the regulatory impact of the revision of the self-regulation in the field of evaluation activities was held in the videoconference format.

The discussion was attended by representatives of the Chambers of appraisers, professional audit organizations, members of the Expert Council of the Ministry of Finance, NCE "Atameken", the Prosecutor General's Office of the Republic of Kazakhstan, the Agency for Regulation and Development of the Financial Market and the Internal State Audit Committee (more than 50 people).

The Ministry of Finance has presented 3 regulatory alternatives (legal requirement):

  1. Preservation of the plurality of SRO (SRO criteria – the number of members);
  2. Establishment of the Evaluation Committee under the Professional Audit Council (with the preservation of the plurality of SRO);
  3. State regulation (return to licensing of appraisers and state control).

Arman Bekturova, Director of the Accounting, Audit and Evaluation Methodology Department, noted that the Ministry of Finance, within the framework of the ARV, proposes measures to improve the quality of assessment services and strengthen the responsibility of appraisers, including legal entities with whom appraisers have concluded employment contracts.

This is due to appeals and complaints received by the Ministry and the Chambers of Appraisers (490) and private court rulings (more than 20). At the same time, the evaluation activity of legal entities today is uncontrolled and no liability is provided.

The Prosecutor General's Office, based on the practice of the supervisory authority, by letter No. 2-010355-21-39442 dated June 11, 2021, proposes expanding the scope of state regulation of appraisal activities, control functions of state agencies, strengthening the responsibility of appraisers, etc.

The Agency for Regulation and Development of the Financial Market reports that according to the results of the assessment of the quality of banks' assets (AQR), a number of factors have been identified that influenced the change in the estimated value of property acting as collateral for loans. The reason for the overestimation of the total value of collateral is a poor-quality assessment. It is noted that the most common example is the use of such methods and approaches by appraisers, which as a result does not reflect the market value.

The lawyer of the "Almaty City Bar Association" Kusainova Zh.Zh. notes the formal approach of the Chamber of Appraisers "Commonwealth of Appraisers of Kazakhstan" to the consideration of complaints and the lack of proper control.

Thus, the Ministry of Finance proposes to create a Committee, which will include representatives of the bodies of the Internal State Audit Committee, NCE "Atameken", chambers of appraisers and an independent director.

This committee will coordinate the results of the audit of the report on the assessment of objects of strategic importance and state property before its release by the appraiser;

take part in qualification exams and issue a certificate of passing exams (issuance of a certificate of qualification "appraiser", "expert" in the competence of the chambers of appraisers);

approve methodological manuals on the application of evaluation standards and carry out evaluation according to the rating system.

Also, the Ministry presented specific proposals for regulating the appraisal activities of legal entities.

Having studied international experience, it was noted that in America, the development of examination materials, the establishment of requirements for the education and experience of evaluators, are within the powers of independent bodies.

The proposed innovations were received with criticism from the evaluation community.

At the same time, the position on the need to take measures to improve the effectiveness of self-regulation was supported by all participants of the round table.

The representative of the Prosecutor General's Office and the head of the ARRR Department Sadykova Anar, supporting the expediency of taking measures in the field of evaluation activities, proposed to finalize the ARV taking into account the opinions of all participants.

Sapar Koshkimbayev (Chairman of the Board of PJSC "Chamber of Auditors of the Republic of Kazakhstan") urged the evaluation community to listen and be open to changes.

As a result of the active discussion by the participants of the round table, it was decided to finalize the analysis of regulatory impact with plans for the development of the evaluation sphere in the future.