The client has a business of property investment and letting.
The accounts show a revaluation of commercial property over 5 years ago.
As there is a history of revaluation, the property is now overdue a valuation by a surveyor.
My question is If the director does not obtain a valuation, do the accounts need to be qualified? i.e. do the notes section need to state that a valuation has not been obtained.
Thanks
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The requirement surely is for a valuation every year - but of course not necessarily an independent professional one. What do last year's accounts say about the valuation?
Well first things first. If
Well first things first. If the properties are being accounted for as investment properties annual revaluation is required - is it not?
So it hasn't been shown as an investment property - but it clearly is isn't it? Is the tenant connected?
It sounds as though the company needs to re-classify the property as an investment property and then to apply the appropriate accounting policy for such properties, which is to include them at a current valuation each year. The valuation can be an internal one, and from memory I am not aware of any requirement for there to be an independent professional valuation, either every five years or after any other interval.
use last valuation
In the notes, state that the property was revalued by the director at £x (same as previous valuation) at 31.12.13 (if that's the year end).
Then get the director to sign the letter of representation including confirmation of the revaluation.
Agree with the above with the provisos that (a) the re-classification will have to occur first, and (b) the value must be what the director honestly believes, which is unlikely to be the same as the previous valuation less subsequent depreciation. Unless by some extraordinary coincidence it is you will have some revaluation adjustments to make as well.
SSAP 19
"The accounts show a revaluation of commercial property over 5 years ago.
As there is a history of revaluation, the property is now overdue a valuation by a surveyor."
I think you may be thinking of the guidance in the venerable SSAP 19 which expected but did not mandate an external valuation at least every 5 years where investment properties were a substantial part of the business and the business was a major enterprise such as a listed company.
As an aside, are you sure it has not been treated as an investment property just because it is included in tangible fixed assets (which after all is where it should be)? It may just mean that the disclosures are lacking.