To implement the Asset Valuation Law, standardize asset valuation practices, strengthen regulatory oversight of asset valuation practitioners, and promote the development of asset valuation standards, 2017 Year 8 Moon 23 On [date], the Ministry of Finance formulated and released the “Basic Standards for Asset Valuation” (hereinafter referred to as the “Basic Standards”), effective from [date]. 2017 Year 10 Moon 1 Effective from the date of issuance. 2004 Year 2 Moon 25 The “Asset Valuation Standards” released on [date] —— Basic Guidelines and Professional Ethics Guidelines for Asset Valuation —— The “Basic Standards” have also been repealed. Recently, a senior official from the Asset Management Department of the Ministry of Finance answered reporters’ questions regarding the formulation and implementation of the “Basic Standards.”

　　1. Q: What is the background behind the formulation of the “Basic Guidelines”?

　　Answer: Asset Valuation Standards —— Basic Guidelines and Professional Ethics Guidelines for Asset Valuation —— Basic Guidelines since 2004 Since its promulgation and implementation, the Guidelines have received widespread recognition from the domestic appraisal community, clients, and government authorities. They have played a significant role in standardizing asset valuation practices, safeguarding the public interest, and enhancing the industry’s credibility. Currently, the environment for implementing these Guidelines has undergone major changes in legal, regulatory, and practical aspects. To address these changes, the Ministry of Finance has formulated and issued the “Basic Guidelines.”

　　First, implement the requirements of the “Asset Valuation Law.” 2016 The “Asset Valuation Law,” promulgated this year, stipulates that the administrative departments under the State Council shall organize the formulation of basic valuation standards. Valuation agencies and their professional valuers must comply with these valuation standards when conducting business; any violation of these standards will entail corresponding legal liabilities. At the same time, the “Asset Valuation Law” also lays down specific provisions regarding valuation methods, valuation procedures, valuation reports, and valuation archives. The basic standards must be effectively aligned with the “Asset Valuation Law.”

　　Second, the practice of asset valuation is calling for updates. As a professional services industry, the asset valuation sector must earn its market position and respect through professionalism; the Fundamental Guidelines for Asset Valuation serve as an important professional foundation. With the continued advancement of comprehensive deepening reforms, the market-oriented nature of asset valuation services has become even stronger, the scope of the market has expanded further, and the types of assets involved have increased significantly. Consequently, the economic development of the market places ever-higher demands on the professionalism of these fundamental guidelines, necessitating timely updates and improvements. Moreover, after years of practical testing, certain provisions in the original guidelines that no longer align with the evolving needs of asset valuation have gradually become apparent, thus requiring prompt updates and refinements. As the basis for drafting both the professional practice guidelines and the code of ethics for asset valuation, the Fundamental Guidelines need to be updated in response to practical requirements.

　　Third, strengthen regulatory requirements for the asset valuation industry. The “Administrative Measures for Fiscal Supervision and Management of the Asset Valuation Industry” (Ministry of Finance Order No. [number])… 86 According to the regulations, the administrative supervision of asset valuation professional services by the financial authorities is based on the Asset Valuation Standards. In the context of promoting the reform of streamlining administration, delegating power, and improving services, the basic standards need to refine relevant provisions targeting key regulatory aspects such as asset valuation procedures, asset valuation reports, and asset valuation archives, thereby enhancing the operability of the standards and meeting the requirements of reforming regulatory approaches and refining regulatory content.

　　2. Q: What is the main significance of the issuance of the “Basic Guidelines”?

　　Answer: Overall, the "Basic Standards" play a significant role in promoting the development of asset valuation standards, standardizing asset valuation practice, strengthening supervision of asset valuation practice, and protecting the legitimate rights and interests of asset valuation parties as well as the public interest.

　　First, this is an important document issued by the financial authorities to implement the Asset Valuation Law. The Asset Valuation Law requires the relevant administrative departments responsible for asset valuation to organize the development of basic valuation standards. The Ministry of Finance has actively implemented the Asset Valuation Law by organizing the formulation of the “Basic Standards,” which provide a standardized framework for the asset valuation standards system, the fundamental guidelines that asset valuation institutions and their professional personnel must follow when conducting asset valuation activities, as well as key aspects such as asset valuation procedures, asset valuation reports, and archival records. The “Basic Standards” represent a crucial document for the asset valuation industry in fully implementing the Asset Valuation Law.

　　Second, a system of institutional safeguards has been established to ensure standardized practice in the asset valuation industry. The "Basic Standards" specify the fundamental guidelines that asset valuation agencies and their professionals must follow when engaging in asset valuation activities. This helps standardize professional conduct in asset valuation and promotes the healthy development of the industry. The "Basic Standards" include a dedicated chapter that focuses on regulating asset valuation procedures, valuation reports, and archival records. These specifically detailed practice requirements serve as guidelines for the professional conduct of valuation specialists, provide a basis for asset valuation agencies to carry out their internal review procedures, and also function as the standards and benchmarks for administrative oversight by financial authorities, thereby fostering a fair and impartial valuation market environment.

　　Third, a relatively comprehensive system of asset valuation standards has been established. In accordance with the requirements of the Asset Valuation Law, the Ministry of Finance has formulated the Basic Standards for Asset Valuation, while the China Association of Asset Appraisers has developed Practice Standards and Professional Ethics Guidelines for asset valuation. This clearly defines the division of responsibilities between the Ministry of Finance and the China Association of Asset Appraisers in standard-setting, thereby helping to establish a regular mechanism for the formulation and updating of China’s asset valuation standards. The Basic Standards also specify that the Practice Standards for asset valuation encompass various specific standards, guidelines, and advisory opinions.

　　3. Q: What are the main contents of the “Basic Guidelines”?

　　Answer: The “Basic Guidelines” consist of six chapters and 35 articles, covering general provisions, basic principles, asset valuation procedures, asset valuation reports, asset valuation archives, and supplementary provisions. The main contents are as follows: First, the “Basic Guidelines” clearly define the entities subject to their regulation and their scope of application; second, they set forth the basic principles that asset valuation agencies and their professional asset valuers must follow when conducting asset valuation services; third, they provide specific regulations on key practice-related aspects such as asset valuation procedures, asset valuation reports, and archives; and fourth, they specify the composition of the asset valuation guidelines system.

　　4. Q: Could you please introduce the scope of application of the “Basic Guidelines”?

　　Answer: The “Basic Standards” define their scope of application as the asset valuation activities conducted by asset valuation agencies and their asset valuation professionals. An asset valuation agency is an appraisal institution that has been filed with the financial authorities. Asset valuation professionals include asset appraisers as well as other practitioners engaged in asset valuation who possess specialized knowledge and practical experience in this field. The asset valuation activities covered by these standards encompass both statutory and non-statutory asset valuation services. At the same time, the “Basic Standards” clarify that when asset valuation agencies and their asset valuation professionals engage in asset valuation activities governed by laws, administrative regulations, or provisions set forth by the State Council and managed by other administrative departments responsible for appraisal, they shall follow the relevant specific standards instead.

　　5. Q: What are the fundamental guidelines that asset valuation agencies and their asset valuation professionals must follow when conducting asset valuation services?

　　Answer: The “Basic Guidelines,” in conjunction with the Asset Valuation Law, set forth the fundamental principles that asset valuation agencies and their professional asset valuers must follow when conducting asset valuation services. The main contents include: First, compliance with laws and administrative regulations, and adherence to the principles of independence, objectivity, and fairness; second, honesty and integrity, diligence and responsibility, prudence in practice, compliance with professional ethical standards, and proactive maintenance of the profession’s image—without engaging in any activities that could harm the profession’s reputation; third, when conducting asset valuation services, one must independently carry out analysis and estimation and arrive at professional opinions; pre-determined values may not be directly used as the final valuation conclusion; fourth, provisions are made regarding the acquisition and maintenance of professional competence in asset valuation.

　　6. Q: What are the salient features of the “Basic Guidelines” in terms of enhancing and refining the professional requirements for asset valuation?

　　Answer: The “Basic Standards” serve both as the professional guidelines that govern and constrain asset valuation agencies and asset valuation professionals, and as the specialized basis for administrative oversight of asset valuation by the financial authorities. To this end, the newly formulated “Basic Standards” highlight the following key features.

　　First, the practice standards for key stages have been refined, specifying the basic procedures for asset valuation and their corresponding requirements for implementation. The content and disclosure requirements for asset valuation reports have been standardized, and the content and management requirements for asset valuation working papers and archives have been clarified.

　　Second, the requirements of the Asset Valuation Law have been implemented and refined in the following ways: First, the internal review procedures of asset valuation agencies have been strengthened. Specifically, asset valuation professionals prepare a preliminary asset valuation report, which, after undergoing internal review by the agency, is then finalized into a formal asset valuation report. Second, the asset valuation methods—comprising the market approach, the income approach, and the cost approach—as well as their derivative methods—have been clearly defined, thus aligning with the Asset Valuation Law’s requirements on the selection of valuation methods and leaving room for the development of specific guidelines to direct and standardize the choice of valuation methods. Third, a distinction has been made between statutory and non-statutory asset valuation services, and clear provisions have been laid down in accordance with the Asset Valuation Law regarding the handling of asset valuation engagements, the signing and sealing of asset valuation reports, and the preservation of asset valuation archives.

　　Third, the use restrictions on asset valuation reports have been clearly defined: First, the scope of use of asset valuation reports is specified. If the client or other users of the asset valuation report fail to use it within the scope prescribed by laws, administrative regulations, and as stated in the report itself, the asset valuation agency and its professional appraisers shall not be held liable. Second, the users of the report are limited to the client, other users of the asset valuation report as stipulated in the asset valuation engagement contract, and those users specifically authorized by laws and administrative regulations; it is explicitly stated that no other organizations or individuals may serve as users of the asset valuation report. Third, users of the asset valuation report must correctly interpret the appraisal conclusion. The appraisal conclusion does not equate to the realizable price of the appraised object, and the appraisal conclusion should not be regarded as a guarantee of the appraised object’s realizable price.

　　7. Q: How can we effectively carry out the implementation guidance and supervision of the “Basic Guidelines”?

　　Answer: The “Basic Guidelines” have been... 2017 Year 10 Moon 1 Effective from the date of promulgation, in order to effectively implement the “Basic Standards,” fiscal departments at all levels must attach great importance to this task and organize it meticulously. They should regard guiding and supervising the implementation of the “Basic Standards” as a key priority in the management of the asset valuation industry in the near term, and ensure that the following tasks are properly carried out. :

　　First, we must earnestly carry out training and publicity efforts. We will prepare explanatory materials for the “Basic Standards,” and organize and guide fiscal departments at all levels as well as local asset valuation associations to provide systematic training to asset valuation agencies and their professionals. Fiscal departments at all levels and local asset valuation associations should make full use of various communication channels, employing vivid and effective methods to promote the “Basic Standards” both within and outside the industry. They should proactively answer questions, clarify doubts, address concerns from all parties, and create a favorable atmosphere conducive to the implementation of the “Basic Standards.”

　　Second, we need to improve the relevant supporting systems. Fiscal departments at all levels should, in accordance with the requirements of the “Basic Standards,” strengthen the development of management systems for asset valuation services and enhance supervision over the practice behaviors of asset valuation agencies and their professionals. The China Association of Asset Appraisers, in compliance with the Asset Valuation Law and the “Basic Standards,” has issued guidelines for asset valuation. Practice guidelines and professional ethics guidelines, forming a comprehensive and well-coordinated system of asset valuation standards. , And strengthen training.

　　Third, we must strengthen implementation and organization. Fiscal departments at all levels and asset valuation associations should guide asset valuation agencies and their professional appraisers in effectively implementing the guidelines. Asset valuation agencies must earnestly assume their primary responsibilities, promptly refine their internal standards, procedures, and systems for managing asset valuation practice, and ensure that the requirements of the guidelines are fully put into practice.