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Valuation of Land Buildings

Valuer-General's Valuations. Valuations carried out on a seven year cycleThree Values:Land ValueCapital ValueAssessed Annual Value. Defintions. Land ValueThe capital value of land assuming that no improvements have been made.Capital ValueThe capital sum realisable from sale of land including

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Valuation of Land Buildings

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    1. Valuation of Land & Buildings

    2. Valuer-General’s Valuations Valuations carried out on a seven year cycle Three Values: Land Value Capital Value Assessed Annual Value

    3. Defintions Land Value The capital value of land assuming that no improvements have been made. Capital Value The capital sum realisable from sale of land including all improvements Assessed Annual Value Gross annual income from rental after allowing for GST, rates and land tax.

    4. Land Tax Adjustment Factors Land indexed annually for Land Tax purposes only. Indices are municipal averages Separate indices for commercial, industrial, residential and rural land Factors are not applicable for improvements

    5. Adjustment Factors for 2004-05 Residential – range 1.00 to 2.00 Commercial – range 0.85 to 1.50 Industrial – range 0.85 to 1.50 Rural – range 1.00 to 1.50 Acceptable to TAO for land values only

    6. CPI index movements In the last four years CPI has moved 11.8% Construction industry 15.4%

    7. Buildings V-G valuation will not represent fair value after three or four years Other options Independent valuation between V-G’s valuation Apply a suitable index to current replacement cost and restate depreciation Consider materiality?

    8. Materiality issues Given the scale of infrastructure assets, roads, bridges, sewer and water assets, building values are unlikely to be material in the statement of financial position Likewise resultant depreciation of buildings is unlikely to be material in the statement of financial performance

    9. What of the Future? V-G to move to a six year cycle with updates every two years Will apply to all three valuations that are carried out Expected to start in about two years time Does not solve today’s problems

    10. Audit Implications While uncorrected “errors” from a failure to update valuations may not be material in the financial statements, they will reduce the level of tolerance for any other uncorrected errors. You may be called upon to establish that there is no material mis-statement

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