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News & opinion

3 MAY 2019

Can investors rely on statements that include fair value measurements?

With a combined 80 years of experience in the valuation profession, Anthony V Aaron and Jay E Fishman are uniquely positioned to provide a background on the need for transparency and how professional organizations are taking steps to build trust in professional business valuations prepared for fair value measurement purposes. They will discuss the progression of the valuation profession as to where it is today in answering the above question.

The business valuation profession is relatively new and has evolved over time. In the past, the profession was primarily centered on fair market value measurements for tax purposes. The increased focus on fair value measurements in financial accounting has necessitated changes in the profession. These changes include enhancements in developing uniform qualifications, adherence to standards, mandatory performance requirements and proactive quality oversight/enforcement.

The valuation profession has been perceived as being slow to adapt to these changes. The profession has been viewed as being "fractured," resulting in significant diversity in practice, thus leaving stakeholders to question the work product provided by valuation professionals. Based on comments from many stakeholders including the FASB Board members and senior SEC staff members, the profession has taken steps to build trust in the profession. These include development of Valuation Advisories sponsored by the Appraisal Foundation, development of Accounting and Valuation Guides by the AICPA and the creation of the "Fair Value Quality Initiative."

The "Fair Value Quality Initiative" brought together a number of professional organizations including the RICS, ASA and AICPA and led to the CEIV credential. The purpose was to respond to comments regarding the fractured nature of the profession and to build trust in those providing professional business valuations for fair value measurement purposes.

Anthony V. Aaron, CFA, FASA, FRICS, is Adjunct Professor with University of Southern California.

Jay E. Fishman, FASA, FRICS, is Managing Director with Financial Research Associates.

Come to the RICS Business Valuation Symposium

The topics discussed here will be delved into in greater detail by Anthony V Aaron, Jay E Fishman, and other industry experts at the Business Valuation Symposium on 3 June in New York.

Book your ticket now to secure your seat and join the debate.