Accounting standards and the property manager: a case study

Traditionally in the UK, accountants and their concepts of value have held little interest for those involved with the technical aspects of property management. Indeed, property valuers and accountants have traditionally adopted differing professional approaches towards the concept of valuation, despite nominally agreed valuing practices dating back to 1974. Most particularly, notwithstanding these agreements, the accounting profession has regarded the theory of property valuation for company accounts as a monopoly of its professional domination of the creation and implementation of accounting standards. Because of the lack of a codified conceptual framework, property assets were regarded identically to other assets. Equally, property managers attended to technical, infrastructural and legal aspects of managing properties. Examined in this paper, the development process behind Financial Reporting Standard 15: Tangible Fixed Assets (FRS 15) provided a realistic and fundamental shift of attitude. Not only were the opinions of valuers actively sought over the issue, but also the final standard adopted the definitions of value created by The Royal Institution of Chartered Surveyors (RICS). Moreover, property assets now figure prominently in financial statements and so impinge directly on the net asset value and borrowing capability of the firm. Property management and modes of holding property have become central to running the business. This paper examines some of the arguments presented within the discussion process undertaken in the creation of FRS 15, highlighting the different approaches to the issue, and noting the likely negotiations to the standard to follow.