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Introduction to the Asset Valuation Unit

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Updated: 27 November 2012

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| 1

▪ As part of its program to restructure and reform its State Owned Enterprises (SOEs), the Government

of Iraq (GoI) has decided to establish within the Ministry of Finance (MoF) an Asset Valuation Unit

(AVU) with responsibilities that include conducting an inventory of the different SOEs physical assets

and determine their value

▪ The World Bank has provided support to the MoF in 2011 to develop the initial AVU concept and in

2012 to assist the AVU begin functioning (e.g., capability building training)

▪ The Ministry of Finance established an AVU under the leadership of Dr. Salah Al-Hadith

▪ The Prime Minister’s Office endorsed the creation of the AVU its 5 July 2012 memo to MoF; the AVU is

mandated with developing and maintaining an inventory of assets at various SOEs

▪ The Prime Minister’s Office has also suggested that the AVU with play a role in procuring and

managing external professional services required to value various state assets1

▪ The AVU is presently structured around general management and three specific functions: asset

inventory collection, procurement of external services, and database management

▪ The AVU is staffed and the team has received initial training in valuation, accounting standards, and

procurement of professional services to support asset valuation

▪ The AVU coordinated with the PMAC to convene an inter-ministerial meeting to explain the AVU’s

current role and the main elements of the asset inventory process. This meeting – led by the Deputy

Minister of Finance -- was held on 13 November 2012 in Baghdad and involved 50+ participants

▪ The AVU team has reached to ministry points of contact to schedule follow-up working-level meetings

to train ministerial points of contacts in the asset inventory templates and data collection process

Introduction to Asset Valuation Unit – Summary

1 See English translations of memoranda from the Prime Minister’s Office dated 5 July 2012 and 18 September 2012 in Appendix

STATUS AS OF 27 NOVEMBER 2012

| 2

Contents

▪ Introduction to the Asset Valuation Unit (AVU)

▪ Overview of asset inventory process, templates and database

▪ Next steps

▪ Appendices

| 3

Context and rationale for an Asset Valuation Unit (AVU)

Specific need

Robust asset

valuation and

inventory accounting

capabilities are

essential to assessing

the nature and value of

the assets owned by

these SOEs; such

capabilities are

currently inadequate

The GOI is seeking to

restructure and

reform to promote

operational

excellence, and

encourage private

sector involvement in

them

Context

In order to achieve these

aims, the GoI has

established an Asset

Valuation Unit (AVU) in

the Ministry of Finance to

support asset inventory-

related activities and help

with procurement of

external valuation experts

Potential solution

Coordinating and managing external evaluations offers advantages to doing this “in-house”:

▪ Approach provides investors greater confidence in the independence and objectivity of the valuations

▪ Outsourcing tasks to experienced service providers helps ensure that asset inventory and valuation work can commence rapidly and at the required quality from the start; building and training an in-house team will require several years

| 4Source: Ministry of Finance

Prime Minister’s office 5 July 2012 memo formally endorsed the AVU

| 5Source: PMO Memo to MoF

▪ The AVU should participate in the economic transformation measures to

transform the state companies into joint stock companies, including

participation in the meetings of the Restructuring Team to implement the

aforementioned roadmap

▪ The AVU shall support 30 SOEs as pilots in their economic transformation,

including SOEs of the Ministry of Trade, SOEs of the Ministry of Construction

and Housing, SOEs of the Ministry of Water Resources and some of the SOEs

of the Ministry of Industry and Minerals

▪ The AVU should follow up with the work conducted by professional services

firms for selected pilots, in coordination with the PM/ PMAC Task Force for

Economic Reform, serving two objectives:

– Ensure quality of services provided to SOEs

– Learn the work mechanisms of the consultation companies in the field of

asset valuation, setting up investment portfolios and gaining required

experience

▪ The AVU should be capable, in the upcoming years, to provide asset valuation

services for other SOEs (192 SOEs) subject to restructuring process

Highlights from the Prime Minister’s Office memo of 5 July 2012

| 6

The AVU’s functions should follow from the critical need for credibility and

consistency in asset valuation in Iraq

Strategy

… and should involve the

following activities1

The AVU needs to address key issues that

are vital to the GoI and Iraqi people …

Credibility

Promote credibility of asset valuation and

inventory accounting methods, processes

and results

Consistency

Develop simplified, easy to use tools to

capture information consistently across

different SOE

▪ Support and coordinate asset

inventory accounting across GoI

SOEs

1

▪ Help manage relationships with

external valuation experts

5

▪ Manage central repository of all

public asset-related data

3

▪ Serve as central coordinator for

communication and use of data

4

▪ Develop easy to use, standard

templates to record data with

clear instructions

2

1 Initial proposed concept of AVU included “Develop, promulgate, and monitor standard asset valuation policies across government.” Since establishment of AVU, MoF

leadership is of the opinion that that responsibility is best performed by the existing Iraqi bodies (e.g., Board of Supreme Audit)

| 7

The AVU’s core values will include independence, transparency,

objectivity, quality and consistency

Shared values

Independence

Value Application to AVU activities

▪ Ensure that asset inventories and valuations are conducted free

of interference from vested interests to ensure that investors and

the Iraqi people have confidence in the assessments

Transparency

▪ Select and manage external experts/ evaluators via a clear,

open process

▪ Make inventory and valuation information readily available to

potential investors, and general public

Objectivity

▪ Establish clear principles and criteria for selection of external

experts/ evaluators are selected

▪ Commit to internationally recognized standards for valuation

across all SoEs, regardless of other considerations

Quality and

consistency

▪ Ensure that standards/ principles/ criteria are applied

consistently to:

– External expert/ evaluator selection

– Data collection and management

| 8

AVU is structured to execute three core functions

Principal responsibilities

� Maintain databases of the collected information and ensure data is reliably accessible

� Advise Ministries/SOEs on data storage and retrieval (in conjunction with the “Asset

Inventory Collection” team)

� Support AVU on other current and future IT needs

� Support the AVU regarding all administrative / back-office activities within Ministry

� Conduct regular follow-ups on defined tasks within the AVU teams and external parties

� Support AVU team’s external communications

� Coordinate the selection and management of external professional services firms, including:

Develop RFPs, coordinate RFP process, and evaluate bids

Negotiate contracts and monitor implementation

Manage vendor relationships

� Coordinate with each ministries’ “focal point” to communication asset inventory processes

� Maintain standard templates for collection of asset inventory data

� Review data submitted by Ministries/SOEs to ensure consistency

� Advise representatives from Ministries/SOEs, as needed, on use of asset inventory templates

� Conduct data analysis and generate regular reports on collected SOE asset inventory data

Structure

� Responsible for directing overall activities of the AVU and helping define its future path

� Managing senior relationship with major stakeholders (e.g., PMAC, Ministries, NGOs, etc.)

� Responsible for defining capacity and capability building requirements for AVU

Common functions

AVU-specific functions

Leadership

Database

External services procurement

Asset inventory

Management

| 9

AVU is now staffed and trained to begin operations

Name

Staffing

Common functions

AVU-specific functions

Title

Leadership� Dr. Salah Al-Hadithi� Mr. Abdul Sattar Hameed

� Director General and Head of Center� Deputy DG and Accountant

� Mr. Firas Ali Al-Salaman� Mr. Mustafa Burhan � Ms. Maha Mahmoud

Information Technology

� IT Manager� IT Assistant� IT Assistant

� Mr. Hassan Ali� Mr. Aseel Al-Sabak� Mr. Ali Sabah � Mr. Sattar Jasim

Coordination of external relations

� Manager� Assistant� Assistant – Temporary� Legal – Temporary

� Mr. Khuder Yaseen� Mr. Sabah Sarhan � Eng. Abdullatif Al-Khafaji

Asset inventory collection

� Asset Inventory manager � Assistant� Assistant

Administrative� Mr. Yousif Al-Issawi� Ms. Huda Al-Azzawi

� Manager � Assistant

STATUS AS OF 10 OCTOBER 2012

| 10

AVU team has received initial customized training in asset valuation,

accounting standards, and professional services procurement

Skills

AVU team judged workshops to be valuable, practical experiences

AVU has received intensive, customized training

▪ Held two “field & forum” workshops

– 8-day training workshop in Istanbul,

Turkey (31 July – 7 August 2012)

– 3-day workshop in Dubai, UAE (31

October – 2 November 2012)

▪ Introduced AVU team to core concepts

and tasks needed to fulfill

responsibilities

– AVU’s roles and responsibilities

– Basic knowledge on accounting,

company valuation, and professional

services procurement

▪ Provided opportunity for team building

and problem solving on tactical next

steps (e.g., finalizing SOE asset

inventory template)

▪ Overall participant feedback was very

positive (average score of 4.6+ out of 5)

▪ AVU team highlighted the value of the

“practical, hands-on” exercises to

introduce asset valuation fundamentals

and completing asset inventory data

templates

▪ The AVU team also very much

appreciated the discussion on the AVU

roles & responsibilities, tools, and its core

processes

▪ Workshop participants judged the

procurement session as particularly

valuable, including opportunity to meet

with two top quality accountancies

▪ Additional details on workshops and participant feedback in in appendices

| 11

Contents



▪ Next steps

▪ Appendices

| 12

AVU-GoI interaction model for asset inventory data collection

1 Ministries are in the process of naming the “focal points” and working level contacts for the AVU. So far, those designated have come from each ministries’ officials

and teams in charge of SOE restructuring and reform

AVU

Ministries

SOEs

▪ AVU inventory collection team coordinates with ministries regarding

asset inventory data and collection process

▪ Intra-governmental team coordinates with ministries on standard

asset accounting policies

▪ Ministry designated key contact acts as a “focal point” of

interactions with AVU and SOEs1

▪ Ministry appointed contact coordinates with its SOEs regarding AVU

data requests and policy implementation

▪ Each SOE designates key contact (most likely in finance

department) to act as focal point for interactions with ministry on

AVU-related matters1

▪ SOE collects data and implements asset accounting policies

| 13

Design principles for AVU asset inventory and

baseline valuation database

Data ownership/ responsibilities

▪ SOEs are responsible for managing and updating asset inventory and

valuation data in their general ledger/ balance sheet

▪ AVU checks and follows up with SOEs regarding comprehensiveness and

consistency of asset data in accordance with standard policies

▪ AVU provides instructions on what specific data/information is required,

where this data is typically recorded and how the data should be recorded

in the database

Assets covered by AVU

▪ AVU focuses only on SOE physical fixed assets that are on SOEs’ general

ledgers/ balance sheets

▪ All SOEs (via respective ministries, except Oil) are included in this effort

Source of asset data

▪ SOEs’ balance sheet and general ledger are the sole data source for asset

inventory and asset valuation

▪ AVU asset database serves as central collection of data from these sources

▪ AVU collects quantity and value of SOE assets on regular basis (e.g.,

annually, by end of each financial year)

▪ AVU does not collect booking transaction information related to the change

of the asset positions

Systems

| 14

Asset inventory data will come from SOEs’ balance sheets and general

ledgers and collected in easy-to-use templates

اختياريإلزامي

المساحةالموقعجنس العقار

القيمة ا�ولية / سعر الشراء

تاريخ الشراء

القيمة الدفترية الحالية

السجل العقاريا�ستخدام الحاليقيد التثبيت في السج$ت المالية

للشركة

اسم المالك

القيمة السوقيةوضع الملكيةمصدر القيمة السوقية

الناحيةالقضاءالمحافظةتمتر مربع

دينار عراقي

السنةدينار عراقي

استعمال الشركة، مؤجرة، شاغرة، أخرى

ا(ستخدام في حالة (

" اختيار

")أخرى

التاريخالعددرقم الجلد

التاريخالرقمنزاع قانوني،

ب. نزاع قانوني

تفاصيل النزاع


1

2

3

4

5

Source: Team Analysis; interviews with MoF AVU staff

Example: Land template

▪ Asset inventory data templates “co-created” with AVU team▪ Pilot of data collection is underway with Al Mansour State Company (MoCH)▪ Additional asset inventory templates in appendices

Systems

| 1515

“Version 2.0 Solution”: Asset inventory database has migrated to a

Microsoft Access platform with customized, “user friendly” interfaces

Back-EndFront-End

Asset inventory

MS Access databaseSOE A

SOE B

Data reports

and analysis

� SOEs fills out/updates asset inventory Excel file provided by the AVU

� Ministerial focal points “quality assure” quality of inventory information, consolidate the files and transmit to AVU

� AVU team “quality assures” asset inventory data and then uploads to Access database

� AVU team conducts data analysis and create reports� AVU exports SOE data to Excel for update by SOE

Rationale for solution architecture:� Excel-based front-end allows faster and easier roll-out, given limited network connectivity, limited IT familiarity, and

common availability of MS Excel at SOEs/Ministries� Excel-based approach also allows ministerial focal points to “quality assure” data without requiring specific database knowledge� Upload into MS Access database allows reliable central storage, version/history control, data analysis and report generation

SOE 1 Asset

inventory

Excel file

SOE X Asset

inventory

Excel file

SOE A Asset inventory

Excel file for update

SOE B Asset inventory

Excel file for update

Asset inventory

data Excel files

Systems

▪ Additional details “Version 2.0” database solution in appendices

| 16

Content



▪ Next steps

▪ Appendices

| 17

Immediate next steps

▪ AVU schedules and conducts meeting with working-level representatives

from relevant ministries and SOES to review:

– Overall objective of SOE asset inventory process

– Templates and processes for collecting SOE asset inventory data

– Timeline for completing and submitting SOE asset inventory data

– AVU contacts to answer questions on inventory process

▪ SOEs begin compiling asset inventory data and communicate to AVU via

their ministry points of conduct

| 18

Contents



▪ Next steps

▪ Appendices

| 19

Appendices

▪ Communications from Prime Minister’s Office regarding AVU

▪ Summary feedback on Istanbul capability building workshop

▪ Summary feedback on Dubai capability building workshop

▪ Summary of AVU’s inter-ministerial meeting (13 November 2012)

▪ Details on asset inventory data collection systems

| 20

Republic of Iraq

Prime Minister’s Office

No. Meem. Raa. Noon./Dal 2/10/7908

Date: July 5, 2012

To/ The Ministry of Finance- Minister’s Office

Asset Valuation Unit

Greetings,

With reference to your Note Verbale No. 166 dated May 13, 2012, of which a scanned copy is attached

herewith, and in the light of appreciating the efforts of the Ministry to support and implement the roadmap of restructuring

the SOEs that has been verified by the Council of Ministers in accordance with the Decree No. 314 in 2010, we would like

to express our gratitude to the support of the World Bank in assisting the Ministry of Finance to establish this Unit which is

hoped to take an active role in evaluating the assets of the SEOs, setting up the investment portfolios, and completing the

transformation requirements into a joint stock company.

In order to coordinate the efforts, a meeting has been held between the SOE Reform Team within the PM/

PMAC Task Force for Economic Reform and the AVU at the Ministry of Finance on Tuesday, July 26, 2012. Agreement on

coordination and co-working on the following points has been made:

First: The importance of the establishment of the “AVU” as a central unit located in the Ministry of Finance, that will

participate in the economic transformation measures to transform the state companies into joint stock companies, as well

as participating in the meetings of the Restructuring Team to implement the aforementioned roadmap.

Second: The above mentioned Unit shall support the state companies which have been chosen as successful pilots of

transformation, including 30 companies as follows:

▪ SOEs of the Ministry of Trade.

▪ SOEs of the Ministry of Construction and Housing.

▪ SOEs of the Ministry of Water Resources.

▪ Some of the SOEs of the Ministry of Industry and Minerals.

In the field of choosing the reliable consultation companies for contracting purposes, in order to act as an umbrella for the

SOEs been chosen to be transformed into joint stock companies.

Source: PMO Memo to MoF

PRELIMINARY TRANSLATION

English translation of Prime Minister’s Office Memo to MoF concerning

AVU Role (1/2)

| 21

Republic of Iraq



Date: July 5, 2012

To/ The Ministry of Finance- Minister’s Office

Asset Valuation Unit

Third: When the “AVU” establishment, and being able to operate, after completing the training and work requirements in

November 2012, the Ministries would have been completing the contracting requirements with the consultation

companies. That said, it would be important to follow up the work of those companies by the AVU in coordination with the

PM/ PMAC Task Force for Economic Reform, which would achieve two objectives:

▪ To follow up the work of the consultation companies regarding the implementation of the consultation contracts

concluded with the aforementioned chosen SOEs.

▪ To learn the work mechanisms of the consultation companies in the field of asset valuation, setting up the investment

portfolios, and gaining the required experience according to the modern standards.

Fourth: The AVU shall provide benefit in the upcoming years to implement asset valuation for the other SOEs, regarding

that we have 192 SOEs that are subject to restructuring process.

Fifth: We may not be able to bring investors for the SOEs of investment portfolios during the same period of time, which

may require implementing updates for the asset valuation after one year from the first valuation. The AVU may undertake

this task in the future after it gains the required experience and qualification.

Best Regards


Dr. Hamid Khalaf Ahmed

Acting P.M.’s Office Manager

July 4, 2012


PRELIMINARY TRANSLATION

English translation of Prime Minister’s Office Memo to MoF concerning

AVU Role (2/2)

| 22

Prime Minister’s Office 18th September memo to ministries urging

expedited signing of contracts and mentioning AVU’s role in the process

Source: Ministry of Finance

| 23

Republic of Iraq



Date: September 18, 2012

Very Urgent

To/ Ministry of Industry and Minerals- Minister’s Office

Ministry of Water Resources- Minister’s Office

Ministry of Trade- Minister’s Office

Consultation Contracts

Greetings,

With reference to the issue of restructuring the SOEs, in order to achieve the planned objectives and allocate the money

required for the process, we would like to draw your kind attention to the following points:

1. It is necessary to conclude the consultation contracts regarding that the fiscal year is close to end, and there are

worries of not signing the contracts and opening the bank credits before the end of the fiscal year.

2. Since that a contract is a law between two parties, and it is mutual obligations; the preparation of the contract

package should be a highly important and precise process. The items required for developing the work of the SOEs

should be specified, as well as the diagnosis of the profitable production opportunities, treatment of social effects

resulted from excess labour identified according to the standards of actual need that are considered in the light of

experience, specialization, accounts of marginal productivity and marginal cost for the employees in the company,

precise valuation of assets according to the market prices, preparing investment portfolios for transformation into joint

stock companies, and other special items for each SOE that intends to transform into a joint stock company. Any

imprecise preparation for the contracts documents may result in unreliable contracts

3. It is necessary to address direct RFPs to a number of reliable consultation companies that are capable of providing

the required consultation services to reach for the ultimate goal


English translation of Prime Minister’s Office, 18th September, Memo to

ministries (1/2)PRELIMINARY TRANSLATION

| 24Source: PMO Memo to MoF

Republic of Iraq



Date: September 18, 2012

Very Urgent

To/ Ministry of Industry and Minerals- Minister’s Office

Ministry of Water Resources- Minister’s Office

Ministry of Trade- Minister’s Office

Consultation Contracts

Greetings,

4. It is necessary for the SOE Reform Units in the Ministries to take major role in following up the conclusion and

implementation of the contracts in conjunction with the Asset Valuation Unit in the Ministry of Finance which would

play role in following up the restructuring on site step by step, and report to the PMAC SOE Reform Task Team

5. We recommend to hold a meeting for the directors general of the 38 SOEs which are subject to restructuring process

in the relevant ministries, on Monday, September 24, 2012 at the PMAC building at 10:00 a.m., to review the progress

of the steps forward, and to deal with the obstacles that hinder the conclusion of the contracts, as well as presenting a

guidelines paper by the World Bank to support the SOEs in this mission

For your kind action, and to kindly inform us

With appreciation

Dr. Hamid Khalaf AhmedActing Office ManagerPrime Minister’s Office

Electronic copies to/

▪ Ministry of Construction and Housing – Minister’s Office: With reference to our Note Verbale No. Meem.Raa.Noon./Dal2/17/10494 dated 9/16/2012, for your kind attention, with appreciation.

▪ Prime Minister’s Advisors Committee/ Your Note Verbale No. Saad/534 dated 9/5/2012, for your kind attention, with appreciation.

▪ Following up Committee

▪ Out-going Notes Verbales Filing Office

English translation of Prime Minister’s Office, 18th September, Memo to

ministries (2/2)PRELIMINARY TRANSLATION

| 25

Appendices






| 26

AVU Workshop (July 31 – August 7, 2012): Objectives and Structure

� Introduce the AVU team to core concepts and tasks

− AVU’s roles and responsibilities

− Basic knowledge on accounting, company valuation, and

procurement needed to fulfill these responsibilities

� Provide opportunity to problem solve on tactical next steps

(e.g., finalizing SOE asset inventory template)

Workshop

objectives

Workshop

structure

� The 8-day workshop was conducted from July 31 to August 7

in Istanbul, Turkey

− 6 days dedicated to presenting and reviewing new content

− 1 day reserved for reviewing core content and final Q&A

− 1 day reserved for relaxation

Participants� AVU team: 9 participants

� World Bank Representatives: 2 participants

� McKinsey & Management Partners Trainers & Consultants: 5

participants

Istanbul workshop – overview

| 27

AVU Workshop Overview

Session 1 - AVU Overview

Session 2 - AVU Roles & Responsibilities (Part 1)

Session 3 - AVU Roles & Responsibilities (Part 2)

Session 4 - Accounting Standards

Session 5 - Enterprise Valuation

Session 6 - Procurement

Istanbul workshop – overview

▪ Customized training materials

available in Arabic and English

| 28

� Overall participant feedback was very positive as measured by surveys conducted

after each day’s session

− Average score of 4.7 out of possible 5 across 35 questions

� AVU team highlighted the value of the “practical, hands-on” exercises to introduce

asset valuation fundamentals and completing asset inventory data templates

� The AVU team also very much appreciated the discussion on the AVU roles &

responsibilities, tools, and its core processes. Active engagement in discussion and

exercises refined

− Draft AVU processes

− Standard asset inventory data collection template

� Workshop participants judged the procurement session as particularly valuable

− Session introduced essential elements of “international standard” approach to

procurement with special emphasis upon professional services

− Session concluded that McKinsey/Management Partners will provide additional

customized training on this priority topic given its importance to the AVU’s

success

AVU Workshop – feedback summary

Istanbul workshop – feedback overview

| 29

AVU overview was rated as highly important for the AVU team

and provided important context for its work

▪ The provided AVU case studies around the world where highly appreciated and provided the AVU a good context regarding their future work

▪ The AVU objectives and tasks provided the team a deeper insight regarding their future scope of work and responsibilities

Post-assessment feedback scores – Session 1: AVU Overview (Number of responses from 9 participants)

Source: Team & feedback forms

Representative participants’ quotes and conclusions

3

665

4

5

1

32

3

1111 111

Quality of

case study

Importance

of the AVU

Clarity of

context &

outcome

Trainer

communication

Overall session

evaluation

No response

Poor

Fair

Good

Very good

ExcellentIstanbul workshop – feedback details

| 30

International asset valuation and Turkish privatization

experiences introduced AVU team to other reference examples


▪ The detailed responsibilities for each team of the AVU were very useful in understanding their future roles and the skills required for each position

▪ The overview on the Turkish Privatization presented by Mr. Ozgur and the questions and answers following the presentation were highly appreciated by the AVU team


Post-assessment feedback scores – Session 2: AVU Roles & Responsibilities (Part I)(Number of responses from 9 participants)

65

66

32

3

7

2 221

Teams main tasksAVU structureAVU tasksCommunicationOverall session

evaluation

No response

Poor

Fair

Good

Very good


| 31

The AVU roles & responsibility session provided a well-

received introduction to the AVU team’s future roles and tasks


▪ The AVU team requested a list of solid consultation companies in the area of asset valuation to be suggested for their future work with the SoEs, and for the pilot SoEs now

▪ The team requested a training on how to develop a TOR for the consultation companies in an addition to some contractual information of the international standards


Post-assessment feedback scores – Session 3: AVU Roles & Responsibilities (Part II)(Number of responses from 9 participants)

655

888

322

11 12

1 1

SummaryEx. 3Flow chartTeam

discussion

Communi-

cation

Overall

session

evaluation

Poor

No response

Fair

Good

Very good


| 32

The AVU team highly rated the exercise on the asset inventory

template developed with McKinsey & Management Partners


▪ The AVU team valued the general accounting standards overview and their usage in asset valuation giving their various background and experience

▪ The team were able to finalize the template and the instructions accompanying the template to be sent to the pilot SoEs upon their return from the training


Post-assessment feedback scores – Session 4: Accounting Standards(Number of responses from 8 participants)

6555

76

233

21

21

ExercisesAsset

valuation

methods

Exercise

EBITDA

Accounting

standard

Communi-

cation

Overall

session

evaluation

No response

Poor

Fair

Good

Very good


| 33

The AVU team highly rated the Discounted Cash Flow and NAV

method as it is the one they will most likely use


▪ The AVU team benefited from the overview of the three methods for enterprise valuation as this will help them follow up on the work of the consultation companies in the future

▪ The team highly evaluated the trainers and their knowledge in the field of expertise

▪ The practical exercises accompanying each method were very useful too


Post-assessment feedback scores – Session 5: Enterprise Valuation (Number of responses from 8 participants)

76

788

7

5

2111 1

2

NAV methodMultiples

method

Discounted

cash flow

General

overview

Evaluation

meaning

Communi-

cation

Overall

session

evaluation

No response

Poor

Fair

Good

Very good


| 34

The AVU team highly rated the introduction to the procurement

cycle and evaluation approach for bids



▪ The AVU team concentrated on the best way for re-valuation of assets which is the market value

▪ The team had a chance to make a comparison between the international procurement methods with the Iraqi Government regulations

▪ The training on preparing the ToR along with the list of consultation companies working in Iraq were very useful

Post-assessment feedback scores – Session 6: Procurement (Number of responses from 8 participants)

78

78

98

221 11

ExercisesContractors

evaluation

Procurement

cycle

Need of

service

providers

Communi-

cation

Overall

session

evaluation

No response

Poor

Fair

Good

Very good


| 35

AVU Workshop Photos (1/2)

Istanbul workshop – photos

| 36


Istanbul workshop – photos

| 37

Appendices






| 38

AVU Workshop (October 31 – November 2, 2012): Objectives and Structure

Workshop objectives

Participants

▪ Build understanding of the RFP template

▪ Introduce a sample ToR (Terms of Reference)

▪ Explain the RFP process

▪ Help understand / practice proposal evaluation methodology

▪ Conduct live interactions with relevant representatives of large accounting firms (Ernst & Young, Deloitte & Touche)

▪ Introduce the database management tool

▪ AVU team: 11 participants

▪ World Bank: 2 participants

▪ Ernst & Young: 2 participants; Deloitte & Touche: 4 participants

▪ McKinsey & Management Partners: 6 participants

Workshop structure

▪ The 3-day workshop was conducted from Oct 31st to Nov 2nd in the Dubai office of McKinsey & Company

– Day 1 was dedicated to building an understanding of the RFP

– Day 2 was dedicated to presentations by the accountants

– 1/2 a day on Day 2 was for the IT training (session was run in parallel to the one of the accountant sessions)

– Day 3 was reserved for additional clarifications and was utilized for revisiting the ToR and going through vendor management module

Dubai workshop – overview

| 39

AVU Workshop Overview

▪ Day 1 (31st Oct, 2012)

– Istanbul recap

– Session on RFP template

– Session on RFP process

– Session on proposal evaluation

▪ Day 2 (1st Nov, 2012)

– Presentation by Ernst & Young

– Presentation by Deloitte & Touche

– Session on database management

– Session on document management

▪ Day 3 (2nd Nov, 2012)

– Reserved for additional clarifications (utilized for revisiting the ToR and

have a session on vendor management)

Dubai workshop – overview

| 40

AVU Workshop – feedback summary

▪ Overall participant feedback was positive as measured by surveys conducted after

each day’s session

– Average score of 4.6 out of possible 5

▪ AVU team highlighted the value of the workshop’s “practical” approach and

appreciated the “hands on” exercises to introduce proposal evaluation methodology

and the ToR (Terms of Reference)

▪ The team also found the interaction with the two accounting firms (Ernst & Young

and Deloitte & Touche) extremely valuable

– Helped the AVU team to understand how various accounting firms approach

asset valuation and the challenges these professional firms face while working in

transitional economies such as Iraq

– Improved AVU team’s understanding of how to approach procurement of

professional services

▪ The AVU team also rated the IT training sessions positively; the IT team especially

valued the database management tool training, with its “hands on” exercises that

demonstrated the tool’s various functionalities in a practical manner

Dubai workshop – feedback overview

|

Day 1 sessions covering various elements of the RFP

were rated highly by the various participants

41

Post-assessment feedback scores – Day 1Number of responses from 11 participants


98

7

43

87

22

44333

1

3

1

3

11

RFP template discussion

Recap of Istanbul

RFP Process

Overall session evaluation

Trainer communication

Exercise on proposal evaluation

Proposal evaluation

Excellent

No response

Poor

Fair

Good

Very good


▪ Session on RFP template gave the team a good idea of the structure of various elements of a RFP and also helped them understand how different elements interact with each other

▪ The exercise on proposal evaluation helped the team understand the intricacies of selecting and assigning weights to the factors which will be important for AVU in evaluation of various professional services firms

Dubai workshop – feedback details

|

3

77

9

2

445

211

3

E&Y presentationTrainer communicationOverall session evaluation

Deloitte & Touche presentation

42Source: Team & feedback forms

AVU team found the live interactions with the two

invited accounting firms extremely useful

Post-assessment feedback scores – Day 2 (presentations by accounting firms)Number of responses from 12 participants


▪ The interactions helped the team understand how the accounting firms approach asset valuation and what different methodologies they use

▪ The sessions also helped the AVU team understand the challenges which might be faced by accounting firms in performing the asset valuation at different SOEs

No response

Poor

Fair

Good

Very good

Excellent


|

AVU IT team members found session focusing on database management

and document management to be practical and useful

2

3

1

3

1

2

Overall session evaluation

Communication Document Management

Database Management

43Source: Team & feedback forms

Post-assessment feedback scores – Day 2 (IT session)Number of responses from 3 participants


▪ The session helped the AVU team understand the data consistency issues they might face in data received from the ministerial focal points

▪ Hands on practice on the database tool helped the team members understand various functionalities of the tool; the exercise also helped the team members recognize various additional functionalities they might require to securely manage the data

Very goodExcellent


| 44


Dubai workshop – photos

| 45


Dubai workshop – photos

| 46

Appendices






| 47

Summary of AVU inter-ministerial meeting – 13 November 2012

� On 13 November 2012, the Ministry of Finance and its Asset Valuation Unit (AVU) and the

Ministry of Finance (MoF) convened a meeting to introduce the AVU to the four ministries with

SOEs (State Owned Enterprises) prioritized for support in the current tranche of SOE

restructuring and reform

� Over 50 officials participated in this meeting – including representatives from PMAC, Ministry

of Trade, Ministry of Construction and Housing, Ministry of Water Resources, Ministry of

Industry and Minerals, and the Director Generals of various SOEs belonging to these

ministries

� The Deputy Minister of Finance started the meeting with an overview of the importance of

SOE restructuring, challenges associated with restructuring, and the AVU’s role in supporting

the broader restructuring agenda

� Dr. Salahuddin Hamid Al-Hadeethi then introduced AVU

� Mr. Firas Ali Mohammed then talked in detail about AVU’s structure and its mandate

� The AVU team circulated a brochure describing its role and how ministries and SOEs can

contact the AVU

� The meeting was very well received and will be followed additional meetings at the working

level between the AVU and its ministerial focal points to introduce the data collection

templates for building the asset inventory database

Inter-ministerial meeting

|

Participants in inter-ministerial meeting (1/3)

48

Ministry of Industry and Minerals

No.

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

1

29

Name

Adnan Marhun Kadhum

Amer Abbas Hraib

Khalil Ibrahim Rashid

Abbas Majid Abdulsahib

Iman Najim Abid

Nabil Abdulhussain Hasan

Abduljabbar Kadhum

Azhar Ahmed Majeed

Hadi Challub Jasim

Thaer Ali Karam

Shakir Mahmoud Salem

Ikhlas Kadhum

Mohammed Abdullah Sultan

Mahmoud Ismail Hindi

Haqqi Ismail Khudhair

Bashar Adnan Sharif

Mazin Oda Thejil

Alaa Mohammed Mustafa

Basil Mehdi Hussain

Ali Ghanim Gatti

Burair Hussain Nasir

Adil Majed

Saadi Noori

Sabri Saeed Issa

Ayad Faris Khudhair

Ghaidaa Zeki Marhoon

Nabeel Jamil Saadildeen

Laila Karim

Sabeeha Nasir Faraj

Affiliation (SOE)

Wool Industries

Textile Indusries/ Wassit

Cotton Industries

Textile Indusries/ Hilla

Leather Ind.

Al-Zawraa

Al-Mansour

Al-Mansour

Electrical Ind.

Electrical Ind.

Ibn Sina

That Al-Sawari

Al-Faris

Al-Faris

Nasr

Nasr

Al-Sumood

Al-Sumood

Mechanical Ind.

Mechanical Ind.

Ibn Sina

Ur

Ur

Construction Ind.

Al-Furat

Hand-made Carpet

Readymade clothing

Economic Dept.

Interior Monitoring

Position

Expert

Expert

Inter-ministerial meeting – participants

|


49

Ministry of Construction and Housing

No.

30

31

32

33

34

35

36

37

38

39

40

41

42

43

44

45

Name

Tariq Hameed Ahmed

Kifah Qadduri Irzuqi

Salah Hasan Abdulhamid

Saif Raad Abdulhamid

Faridun Amro Gorgis

Abbas Sahib Hajib

Ghaidaa Nabil Mahmoud

Iman Hameed Majeed

Hala Mahmoud Ali

Usama Abdulqadir Zainel

Izziddin Hussain Kadhum

Yasemin Hassun

Thaer Abdulmajeed Abdulrahman

Sawsan Hussain Mahmoud

Ammar Sabah Aziz

Sanaa Mohammed Mahdi

Affiliation (SOE)

SOE Restructuring Dept.

SOE Restructuring Dept.

Hamurabi for Construction Contractons

Hamurabi for Construction Contractons

Al-Farooq for Construction Contractons

Al-Farooq for Construction Contractons

Ashur for Construction Contractons



Al-Fao for Engineering


Saad

Al-Rasheed for Construction Contractons

Al-Rasheed for Construction Contractons

Al-Mutasim for Construction Contractons

Al-Mutasim for Construction Contractons

Position

Cheif Engineer

Assist. D.G. of Accounting

Senior Chief Engineer

Assist. Engineer

Accounting Director/ Assets Section

Senior IT

Senior Engineer

Head of Researches/ Assist. Of Finance D.G.

Senior Chief IT

Senior Chief Engineer

Audit Director

Assist. D.G. of Accounting

Director of Interior Monitoring Section

Accountant

Accountant

Chief Engineer


| 50

Ministry of Water Resources

Position No.

48

49

46

50

52

53

54

55

56

51

57

47

Name

Hutoof Abdulrazzaq Ahmed

Maythem Muneer Shehab

Basma Yahya Muwaffaq

Naji Abid Sultan

Niran Hasan Muhyi

Hasan Abdulkareem Shakir

Mohammed Safar

Madiha Abdulkarim Rumi

Alaa Handhal

Majeda Abid Hasan

Wafaa Sahib

Asya Rasheed Jwad

Affiliation (SOE)

Ministry HQ

Al-Rafidain

Al-Iraq


Ministry HQ

Ministry HQ

Central Markets SOE

Construction Ind.

Automobile

Fairs

Fairs

Ministry HQ

Ministry of Trade



| 51

AVU inter-ministerial meeting (1/2)Inter-ministerial meeting – photos

| 52

AVU inter-ministerial meeting photos (2/2)Inter-ministerial meeting – photos

| 53

Copy of AVU brochure distributed at inter-ministerial meetingInter-ministerial meeting – communications materials

| 54

Appendices






| 55

AVU database content: Field details (1/4)


Land

▪ The land area (measured in m2)▪ Area

▪ Land type, possible values are “agricultural”, “buildings”, “commercial”, “residential”, “vacant” and “other” with additional field to fill only in case of “other”

▪ Land Type

▪ Value for which the land was purchased, or an estimate, at the time of purchase (in IQD)

▪ Initial Purchase Price

▪ Year at which the asset was purchased▪ Purchase Date

▪ Current book value of the land as recorded on the company’s balance sheet (in IQD)▪ Current Book Value

▪ Land current use, possible values are “Used by Company”, “▪ Current Use

▪ Registration of the asset in the local authorities (including asset number, date of registration and file number)

▪ Land Registration Number

▪ Name of individual/entity owning the asset▪ Name of Owner

▪ Legal status of asset ownership (possible values are “Legal dispute” and “No Legal dispute” with additional field (Legal dispute description) to fill only in case of “Legal dispute”

▪ Legal Status

Assetcategory

▪ Current market value of the land▪ Market Value (Optional)

▪ The physical location of the land being valued (including city, district and sub-district)▪ Location

▪ Source of current market value (possible values are “Land valuator” and “Land Agent”)▪ Market Value Source (Optional)

▪ Registration details of the asset in the company records▪ Company Records Registration

Field name Description

Systems – “Version 1.0”

| 56


Buildings

Assetcategory

▪ The physical location of the building being valued (including city, district and sub-district)

▪ Location

▪ Building type, possible values are “industrial”, “Commercial”, “Services”, “Entertainment”, “Medical”, “Warehouses”, “Residential”, “Mining”, “Canals and Dams”, “Road and Bridges” and “other”

▪ Building Type

▪ Value for which the building was purchased, or an estimate, at the time of purchase (in IQD)


▪ Year at which the building was purchased▪ Purchase Date

▪ Current book value of the building as recorded on the company’s balance sheet (in IQD)

▪ Current Book Value

▪ Building accumulated depreciation as recorded on the company’s balance sheet (in IQD)

▪ Accumulated Depreciation

▪ Registration of the building in the local authorities (including building number, date of registration and file number)

▪ Building Registration Number

▪ Replacement cost of the building (in IQD)▪ Replacement Cost (Optional)

▪ Current market value of the building ▪ Market Value (Optional)

▪ Source of current market value (possible values are “Building valuator” and “Building Agent”)

▪ Market Value Source (Optional)

▪ Registration details of the building in the company records▪ Company Records Registration

▪ Building area in m2 and number of floors▪ Building Description

▪ Qualitative assessment of the current condition (e.g. maintenance needed▪ Building Condition

▪ Legal status of asset ownership (possible values are “Legal dispute” and “No Legal dispute” with additional field (Legal dispute description) to fill only in case of “Legal dispute”

▪ Legal Status


Field name Description


| 57

▪ Market Value Source (Optional)

Machinery

Field nameAssetcategory


▪ Machine Type

▪ Description

▪ Condition

▪ Purchase Date



▪ Location

▪ Replacement Cost (Optional)

▪ Market Value (Optional)

▪ Brand

▪ Model/Year


▪ Units of Production

▪ Company Records Registration

▪ Design Production Capacity

▪ Actual Production Capacity

▪ Source of current market value

Description

▪ Type of machine (possible values are “production Facility” and “Service Facility”

▪ Brief description of the main characteristics of the machine

▪ Qualitative assessment of the current condition (e.g. maintenance needed, out of service…etc)

▪ Year at which the machine was purchased

▪ Current book value of the machine as recorded on the company’s balance sheet (in IQD)

▪ Machine accumulated depreciation as recorded on the company’s balance sheet (in IQD)

▪ Physical location of the machine (including city, district, sub-district and building name)

▪ Replacement cost of the machine (in IQD)

▪ Current market value of the machine

▪ Brand/ manufacturer of the machine

▪ Model/ year of manufacture

▪ Value for which the machine was purchased, or an estimate, at the time of purchase (in IQD)

▪ Units of production of the machine (e.g. “pills per year” for drug manufacturing)

▪ Registration details of the machine in the company records

▪ Production capacity of the machine, as designed by the manufacturer

▪ Actual current production capacity of the machine at the time of filling the data

▪ Unique Serial number given by manufacturer/ regulatory entities▪ Machine Serial Number


SystemsSystems – “Version 1.0”

| 58


Vehicles

Field nameAssetcategory Description

▪ Type of vehicle (possible values are “Passengers”, “Goods”, “Other Vehicles”, “Trains”, River Ships”, “Sea Ships” and “Aircrafts”

▪ Vehicle Type

▪ Brief description of the main characteristics of the vehicle▪ Description

▪ Qualitative assessment of the current condition (e.g. maintenance needed, out of service…etc)

▪ Condition

▪ Current book value of the vehicle as recorded on the company’s balance sheet (in IQD)


▪ Vehicle accumulated depreciation as recorded on the company’s balance sheet (in IQD)


▪ Physical location of the vehicle (including city, district, sub-district and building name)▪ Location

▪ Replacement cost of the vehicle (in IQD)▪ Replacement Cost (Optional)

▪ Current market value of the vehicle ▪ Market Value (Optional)

▪ Source of current market value▪ Market Value Source (Optional)

▪ Brand/ manufacturer of the vehicle ▪ Brand

▪ Model/ year of manufacture▪ Model/Year

▪ Value for which the vehicle was purchased, or an estimate, at the time of purchase (in IQD)


▪ Registration details of the vehicle in the company records▪ Company Records Registration

▪ Unique Serial number given by manufacturer/ regulatory entities▪ Vehicle Serial Number

▪ Number of units of this type of vehicle (in case several exist)▪ Number of Units



| 59

AVU database content: Land Template (Arabic)


المساحةالموقعجنس العقار

القيمة ا�ولية / سعر الشراء



السجل العقاريا�ستخدام الحاليقيد التثبيت في السج$ت المالية

للشركة

اسم المالك

القيمة السوقيةوضع الملكيةمصدر القيمة السوقية

الناحيةالقضاءالمحافظةتمتر مربع



استعمال الشركة، مؤجرة، شاغرة، أخرى

ا(ستخدام في حالة (

" اختيار

")أخرى


التاريخالرقمنزاع قانوني،

ب. نزاع قانوني



1

2

3

4

5



| 60

AVU database content: Land Template (English)

Mandatory Optional

Location AreaLand

Type

Initial

Purchase

Price

Purchase

Date

Current

Book

Value

Current UseLand Registration

Number

Compant

Records

Registration

Owner

NameOwnership Status

Market

Value

Market

Value

Source

# City DistrictSub-

districtm2 IQD YEAR IQD

Current

Use

Use

Descrip-

tion, in

case of

"other"

Number DateFile

NumberNumber Date

Dispute

Status

Dispute

DetailsIQD

1

2

3

4

5

6



| 61


الموقعجنس العقار

الوصفحالة البناية

قيمة / الشراءالبناء

تاريخ / الشراء البناء


ا�ندثار المتراكم

السجل العقاريقيد التثبيت في السج$ت المالية

للشركةوضع الملكية

تكلفة ا�ستبدال

القيمة السوقية

مصدر القيمة السوقية

الناحيةالقضاءالمحافظةتمساحة البناء

)2م(

عدد الطوابق





التاريخالرقم

نزاع قانوني، ب. نزاع قانوني




1

2

3

4

5


AVU database content: Buildings Template (Arabic)Systems – “Version 1.0”

| 62

Mandatory Optional

LocationBuilding

TypeDescription

Cond-

ition

Purchase

Price

Purchase

Date

Current

Book

Value

Accum-

ulated

Deprec-

iation

Building Registration

Number

Company

Records

Registration

Ownership status

Replace

ment

Cost

Market

Value

Market

Value

Source

# City DistrictSub-

district

Area

(m2)

# of

FloorsIQD Year IQD IQD Number Date File Number Date

Condi-

tion

Dispute

DetailsIQD IQD

1

2

3

4

5


AVU database content: Buildings Template (English)Systems – “Version 1.0”

| 63


نوع ا,لةوصف موجز

النوعالطراز / السنة

الحالةتكلفة الشراء




موقع ا,لة

وحدات ا1نتاج / الطاقة ا1نتاجية

الطاقة ا1نتاجية ا�صلية

الطاقة ا1نتاجية الحالية

قيد التثبيت في السج$ت المالية

للشركة

رقم ا�صل / الرقم

التسلسلي ل2لة




السنةتدينار عراقي



التاريخالرقمالمبنىالناحيةالقضاءالمحافظةدينار عراقي


1

2

3

4

5

6

7

8


AVU database content: Machinery Template (Arabic)Systems – “Version 1.0”

| 64

Mandatory Optional

Machine

Type

Desc-

ription

Bran

d

Mod

el/

Year

Cond-

ition

Purch-

ase

Value

Purch-

ase

Date

Current

Book

Value

Accum-

ulated

Deprec-

iation

Location

Units of

Produ-

ction

Design

Capacity

Current

Produc-

tion

Capacity

Company

Records

Registration

Machine

Serial

Number

Repla-

cement

Cost

Mark-

et

Value

Market Value

Source

# Year IQD Year IQD IQD CityDist-

rict

Sub-

district

Build-

ing

Num-

berDate IQD IQD

1

2

3

4

5


AVU database content: Machinery Template (English)Systems – “Version 1.0”

| 65


نوع المركبةوصف موجز

النوععدد الوحدات

الطراز السنة/

الحالةقيمة الشراء



موقع المركبةقيد التثبيت في السج$ت المالية

للشركة

رقم ا�صل الرقم /

التسلسلي ل2لة




تدينار عراقي



التاريخالرقمالمبنىالناحيةالقضاءالمحافظةدينار عراقي


1

2

3

4

5


AVU database content: Vehicles Template (Arabic)Systems – “Version 1.0”

| 66

Mandatory Optional

Vehi-

cle

Type

Desc-

riptionBrand

Num-

ber of

Units

Model/

Year

Cond-

ition

Purc-

hase

Value

Current

Book

Value

Accumul-

ated

Deprecia-

tion

Location

Company

Records

Registration

Vehicle

Serial

Number

Replace

ment

Cost

Market

Value

Market

Value

Source

# IQD IQD IQD City District Subdistrict Building Number Date IQD IQD

1

2

3

4

5


AVU database content: Vehicles Template (English)Systems – “Version 1.0”

|

AVU database screenshots and functionality: Login screen

67


Click here to quit the application

▪ Select Login ID▪ Enter Password▪ Click to Login

Login id : Administrator

Password : assetvaluation

|

AVU database screenshots and functionality: Home screen

68


Click here to import data

Click here to export data

Click here to Edit data

Click here to generate reports

Click here to change the settings

� In “Read only” mode the Import button is disabled

|

AVU database screenshots and functionality: Import reports

69


Select the files which are to be imported

Click here to modify the selection

Click here if you want to import all the files

Click here to clear all the selected files

Click here to import the selected files

If import for a particular file fails, name of the file and the reason for the failure will be displayed here

Click on this button and select the folder where the files to be imported are stored

|

AVU database screenshots and functionality: Edit records

70


1. Click on the asset to be updated

3. Add, Delete or Update the records

4. Click on Save Changes

2. Select Company Name (SOE)

|

AVU database screenshots and functionality:

Export archived and current data

71


2. Input the name of the file to be saved

3. Select the SOE 4. Select type of data

to be exported (Current / Archived)

Current records Archives

6. Click here to export the data

5. Enter Year if need to retrieve data from archives

1. Click here to select the destination folder

|

AVU database screenshots and functionality: Generate Report

72

A. Reports by SOE

3. Click here to select all SOEs


Click here to generate the report

3. Select the SOEs to generate the report for

Click here to clear all selected SOEs

1. Click here to select the destination folder

2. Enter the name of the file to be saved


|

j

AVU database screenshots and functionality: Generate Report

73

Click here to select all SOEs


Click here to generate the report

Click here to clear all selected SOEs

Select the SOEs to generate the report for

Select the Asset

Click here to select the destination folder

B. Report for a given asset category


|

AVU database screenshots and functionality: AdministratorA. Settings view: adding a new SOE

74


� Administrator needs to define which companies can be entered into the system� Administrator specifies a “three letter” unique identifier for each company in the system� Only if a three letter code exists for a company the data can be entered for that company� Once a code is defined for a company it cannot be changed

Enter the name of the company

Enter the three letter code for the company

|

AVU database screenshots and functionality: AdministratorB. Settings view: add/delete user; change access rights; change password

75


� Administrator has the right to add a user to the system or delete a user from the system� While adding a new user to the system the administrator can specify one of the three access levels for

the user “Administrator”, “Read only”, “Edit only”� Administrator can also change the access rights of a user or specify new password for the user

|

AVU database screenshots and functionality: UserSettings view: “edit only” and “read only”

76


� In “Edit only” or “Read only” view users have the right to only change their password in the settings view

Introduction to the Asset Valuation Unit - World Bank€¦ · Introduction to the Asset Valuation...

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