Document ID: chunk:federal_register_of_legislation:F2022L01576:body:0:p21
Version: federal_register_of_legislation:F2022L01576
Segment Type: other
Provision Reference: 
Character Range: 56999–59966

be adequately supported and documented.[9] Where applicable, the valuation report must set out how highest and best use was determined.
18.         In some circumstances, it may be difficult to determine the fair value of property assets that have not yet achieved a stable income, or properties that are experiencing fluctuations in income. In such cases, a forecast of expected cash flows must be used to estimate the value of the property. The discount rates used in calculating the value of security must reflect the opportunity cost, determined by way of comparison with prevailing returns on competing investments, of holding the property, assuming a long-term holding. Capitalisation rates must reflect expectations about the long-term rate of return investors require under normal, orderly and sustainable market conditions.

Valuation of security in the form of non–real estate assets
19.         Where collateral is in the form of a security interest over assets as defined in the Personal Property Securities Act 2009, an ADI must ensure that all relevant security is properly scrutinised.
20.         Where a third party supplies information relating to a security interest held by an ADI, for example, outstanding debtors, asset values must be objectively assessed to ensure security coverage is adequate. This may include testing of information supplied.
21.         In determining the fair value of security not in the form of real property, an ADI must also have regard to considerations such as market liquidity, legal costs, impediments to realisation and prior charges.

Attachment B – Prescribed provisioning
     1. Where an ADI undertakes prescribed provisioning, the level of prescribed provisions must be reported to APRA notwithstanding the level of any provisions which an ADI may have actually raised, or the form in which such provisions have been reported, in its audited published financial reports. Where an ADI establishes such provisions in excess of those prescribed, the ADI must continue, for capital and APRA reporting purposes to include any excess provisions, as part of its specific provisions or provisions held against performing exposures that represent unidentified losses, as appropriate.
2.             The amount of prescribed provisions that an ADI is required to hold will, unless otherwise agreed with APRA, be in addition to any provisions held against performing exposures that repreent unidentified losses which it may hold.
3.             A prescribed provision must be treated as a specific provision for capital and APRA reporting purposes and reported on an after-tax basis. Any deferred tax asset associated with the prescribed provision must be removed. Prescribed provisions must be deducted from an ADI's Common Equity Tier 1 Capital unless the amount of the prescribed provision has otherwise not been included in Common Equity Tier 1 Capital.
4.             Where the Board or senior management of an ADI