31 May 2017
A panel of senior valuation professionals examined the status of the Certified in Entity and Intangible Valuations (CEIV) credential and discussed next steps for the business valuation industry at the recent RICS Summit of the Americas. See what they agreed based upon their frank assessment of the profession.
One of the concepts that is critical to business valuation is fair value and the Financial Accounting Standards Board (FASB) has issued statements that sought to provide clarity and guidance around this concept.
'Fair Value Measurement' (FASB ASC 820, formerly FASB SFAS 157), is one of the most prominent accounting standards due to its connection with mark-to-market and fair value. The 2008 market crash caused the SEC to examine this concept as well as the quality of valuations in the US marketplace. The Securities and Exchange Commission (SEC) was critical due to the fragmentation in the valuation community and the perceived lack of quality, consistency and professionalism among valuation practitioners. One panellist pointed out that whether or not these criticisms are fair, the perception of these criticisms drove the outlook and actions.
The CEIV process
Three organisations — RICS, AICPA and ASA — are involved in the CEIV process. The CEIV has four work-streams that govern the process, performance requirements, qualifications and education, and quality control. Panellists discussed the testing and quality assurance that will help to ensure the quality of CEIV holders in the profession.
Challenges & importance
Panellists agreed that fragmentation is a real concern that needs to be addressed. One panellist summarised the state of the BV profession by asking the question: we have professionals, but do we have a profession?
Panellists also pointed to the importance of the CEIV initiative as part of the broader valuation profession. The SEC was concerned about the valuation profession broadly; business valuation was chosen to be the first area to be addressed. Successful implementation of CEIV could provide insights into how the broader valuation community can address the challenges it faces and help preclude the necessity for greater governmental regulation of the profession.
- Anthony V Aaron FRICS, Retired Ernst & Young Principal (Valuation and Business Modelling) and Professor of USC, Board of Trustees for the Appraisal Foundation
- Leigh Miller FRICS, Global Leader, Partner, Ernst & Young (Valuation and Business Modelling)
- BJ Orzechowski, Partner, KPMG LLP (Economic and Valuation Services)
- Stamos Nicholas FRICS, Principal, Deloitte LLP
- Adam Smith MRICS, Managing Director, PwC and Practice Fellow, FASB, Technical Director of Business Valuation Standards, International Valuation Standards Council (IVSC)
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