10 Jan 2017
New credential to improve quality, consistency and transparency of fair value measurement results in financial reporting.
The American Institute of CPAs (AICPA), the American Society of Appraisers (ASA) and RICS (Royal Institution of Chartered Surveyors) are offering a new credential that will enhance the quality, consistency and transparency of fair value measurement results in financial reporting.
Financial professionals who obtain the Certified in Entity and Intangible ValuationsTM (CEIVTM) credential will be required to follow uniform guidance on how much documentation is necessary to support their fair value measurement results in company financial statements for entity and intangible asset valuations. Intangible assets include trademarks, patents and technology, customer sales lists, and non-compete agreements.
This uniform guidance defines the level of documentation needed to make it easier for investors, auditors and regulators to understand how fair value measurement is used to determine values of businesses and intangible assets. The CEIV credential also requires regular monitoring of credential holders to ensure they are following the guidance properly.
Auditors and regulators have sometimes found it difficult to see how certain values in financial statements were determined using fair value measurement. The uniform guidance provided by the CEIV credential should make it easier for all parties to understand how fair value measurement was used to develop those values.
The quality oversight of credential holders will provide clients, regulators, auditors, investors, and the public greater confidence that they are receiving accurate information in financial statements when fair value measurements are performed by someone holding the CEIV credential.
AICPA, ASA and RICS joined forces in 2013 and developed one credential that provides a consistent framework around fair value measurement. The CEIV credential ensures that those conducting fair value measurement have the necessary training, qualifications, experience and expertise to perform this type of work.
The organizations believe the CEIV credential provides an opportunity to enhance the consistency of valuation processes across global markets. Its consistency in training and qualifications, uniform guidance, and ongoing monitoring of professionals can play a critical role in building investor and regulatory confidence in the valuation profession as fair value measurement becomes a more accepted part of company financial statements globally.
With the shift in our economy toward service and technology-based companies, intangible assets are increasingly integral to a company’s financial statements. The new credential responds to regulatory concerns and promotes greater audit quality, consistency and transparency in fair value measurements. Not only will the credential and fair value performance framework help unify the profession, but they will also boost market confidence and protect the public interest.
To obtain the CEIV credential, financial professionals must meet rigorous eligibility requirements determined by the three organizations in collaboration with other organizations that contributed to its development, including The Appraisal Foundation and the International Valuation Standards Council. Those include demonstrating competencies in valuation and fair value measurement through training and assessments, and passing a two-part CEIV exam that will be introduced early this year. Those interested in applying for the credential can learn more at https://ceiv-credential.org/.
The American Society of Appraisers is excited to help lead the effort to develop the new CEIV program and continue to demonstrate the Society’s dedication and commitment to providing the highest possible standards, education and professionalism.
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