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Principles of Livestock Valuation

Principles of Livestock Valuation. Veterinary Services’ Class on Livestock Appraisal February 24-26, 2009. Key Point. When doing appraisals don’t worry about getting the correct value, but instead worry about doing the valuation correctly, i.e. following standard appraisal principles.

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Principles of Livestock Valuation

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  1. Principles of Livestock Valuation Veterinary Services’ Class on Livestock Appraisal February 24-26, 2009

  2. Key Point • When doing appraisals don’t worry about getting the correct value, but instead worry about doing the valuation correctly, i.e. following standard appraisal principles

  3. Introduction • Objectives • Basic: • Ability to review & judge appraisal reports • An understanding of the compensation process and who to contact for help • An appreciation for non-traditional poultry • An understanding of dairy cow appraisal • Advanced: • Ability to appraise animals & write appraisal reports • Encouraged to seek additional appraisal training • American Society of Agricultural Appraisers

  4. Introduction • Outline • Introduction to Appraisal • Compensation’s Role in Veterinary Services • Thus the need for appraisal • Appraisal Principles • Appraisal Reports • What makes for a good appraisal report • Group Exercise in critiquing appraisal reports • Poultry in America • What’s going on in the Western Region • Valuation of Dairy & Poultry • Appraisal Exercises

  5. Why This Course • APHIS needs to have appraisals that will pass audits • APHIS:MRPBS, USDA:OIG, GAO • Poorly done appraisals put APHIS’ ability to manage the compensation process at risk • If auditors don’t have confidence in valuations, then dollar amounts being spent on indemnity more likely will be questioned • If it appears that public funds are not being spent wisely the whole program could be at risk

  6. Why This Course • What do auditors desire in appraisals? • Not some much concerned about the actual value per se, but the process of how the value was determined • Consequently, auditors want enough information so that if they did the appraisal they would have arrived at a similar valuation • Good appraisal reports lead you to value, poor appraisal reports tell you value • This course is about good appraisal reports

  7. What is an Appraisal? • An Appraisal can be of the following • An estimate of cost • A determination of value • A forecast of earnings • A non-monetary opinion as to authenticity or quality of a property • Notice the use of the words estimate, determination, forecast, opinion

  8. What is an Appraisal? • An appraisal is not a precise measurement, neither is it a guess; it is an estimate or an opinion based on supporting facts. • Yin-Yang of appraisal: • art vs. science • subjective vs. objective • To be in agreement appraisals should have similar, but not necessarily the same valuation • Ultimate goal of an appraisal is to convince others that your estimate of value is valid, not precisely correct • Thus, my critiques of Felicia’s appraisals haven’t focused on her values, but in improving the use of supporting facts and presentation of those facts.

  9. Uniform Standards of Professional Appraisal Practice • Saving & Loan financial crisis of the early 1980’s demonstrated the need to improve appraisal practices • Valuations were based upon the needs of the client and not necessarily the value of the property • Properties were over-valued and eventually led to the demise of several savings & loans

  10. Uniform Standards of Professional Appraisal Practice • Appraisal Foundation established in 1987 to develop and promote the Uniform Standards of Professional Appraisal Practice (USPAP) • www.appraisalfoundation.org

  11. USPAP • Has several rules and standards, we will focus on just a few now (more later) • Ethical no-no’s • Appraisal is expected to meet/exceed a predetermined value • Appraisal fee is a function of valuation provided • Failure to disclose conflict-of-interest • Doing appraisals where you have conflict-of-interest (more details later) • Not maintaining confidentiality • If seeking expert opinion, give only enough details for the individual to form an opinion

  12. USPAP • Competency Rule • Should only accept those assignments for which you have training and knowledge • However, can • Gain additional knowledge • Can gather much information from the internet • Consult with an expert • Hire another appraiser to assist you • APHIS Perspective • You have received appraisal training • My assistance is available • Therefore give it your best shot

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