Accreditation Requirements for Appraisal Entities
- Public companies, secondary licensees, and significant subsidiaries must use SEC-accredited appraisal companies (real estate) or PSOs (non-real estate) in specified transactions.
- Non-public corporations with real property must use PRC-licensed appraisers registered with PRBRES.
- Accreditation criteria include 100% Filipino ownership, licensed appraisers with 5+ years experience, compliance with CPE, professional indemnity insurance.
- PSOs require certified accountants or engineers as valuation specialists with 5+ years experience.
- Applicant entities must have adequate personnel, unimpaired capital of P5 million minimum, proper internal controls, and liability insurance.
- Applicant must document professional experience, good standing, and absence of final adverse judgments.
- Application package required: notarized application, board resolutions, fees, qualifications, certificates, client references, audited financials, sample reports, and internal control descriptions.
- Accreditation valid for 5 years, renewable with fees, submission of license renewals, and operational compliance.
Scope and Limitations of Accreditation
- Accreditation is permissive only, not an endorsement by the Commission.
- Review based on documents submitted; due diligence by client and stakeholders recommended.
- Commission disclaims liability from selection of accredited companies.
Operational Obligations of Accredited Entities
- Strict adherence to Code of Ethics for appraisers or valuation specialists.
- Appraisal reports must include:
- Company details and SEC accreditation number and validity.
- Appraiser/valuation specialist's identification and license details.
- Purpose, asset description, client’s business type, and regulatory compliance consideration.
- Adoption of International Valuation Standards or PFRS for financial reporting valuations, with disclosure of deviations.
- Other information as per IVS or applicable standards.
- Commission may request appraisal reports and supporting documents; engagement contracts must allow such disclosures.
- Accredited entities must maintain:
- 100% Filipino ownership and management.
- Necessary business licenses.
- At least two qualified appraisers or valuation specialists.
- Minimum capital of P5 million.
- Effective internal controls.
- Professional liability insurance of at least P500,000.
Annual Reporting and Notification Requirements
- Accredited entities must submit annual report within 105 days after fiscal year-end.
- Reports include appraiser/specialist licenses, client list with service details, summarized audited financials, and other material operational information.
- Entities must notify the Commission within 5 business days if valuation discrepancies affecting client submissions to the Commission are discovered.
Penalties and Sanctions for Non-Compliance
- Non-compliance with accreditation requirements may lead to application denial.
- Penalties on companies engaging non-accredited appraisers vary by type of transaction, e.g., denial of approval or fines up to 1/10 of 1% of property value.
- For non-public entities with real estate, failure to use PRBRES-licensed appraisers results in denial of approval.
- Commission may require re-issuance of appraisal reports for misrepresentations or incomplete reports.
- Appraisal companies misrepresenting accreditation face fines up to P50,000; reports from such firms are inadmissible.
- Unlicensed appraisers referred to PRC for administrative or criminal penalties.
- Fines for accredited entities violating operational/reportorial rules start at P10,000 per violation plus daily fines for delays; repeated violations may lead to accreditation revocation.
- Misrepresentation penalties escalate to fines, suspension, and revocation for repeated offenses.
Transition and Implementation
- Previous guidelines superseded; new accreditation and compliance requirements effective March 1, 2014.
- Specific provisions apply to public companies, secondary licensees, and related transaction types from March 2014.
- Fair value measurement compliance for annual financial statements effective Jan 1, 2014, or fiscal year-end June 30, 2014, for non-calendar-year companies.
- Capital stock compliance deadline for existing accredited companies is Dec 31, 2015.
- Annual report submission deadline adjusted to April 15, 2014, for fiscal year ended Dec 31, 2013.
- All new operational and technical appraisal report content requirements effective March 1, 2014.
- Guidelines effective 15 days after final publication in national newspapers.