CEIV: Enhancing fair value measurement

Le-Anne Lim

Head of Communications and External Affairs, Asia Pacific (RICS)

As regulators pay ever-closer attention to fair value measurement processes and the US Securities and Exchange Commission leads the call for a more robust qualification process for business valuation, we respond with the launch of the Certified in Entity and Intangible Valuations (CEIV) credential at the RICS Business Valuation Conference.

Business Valuation Conference panel

Following initial progress with major US accounting firms, RICS organised their first business valuation conference in Hong Kong on 1 December, where RICS Global Director of Business Valuation Steve Choi presented the CEIV credential to industry for the first time.

Addressing a crowd of over 200 institutional investors, corporate directors and valuation practitioners, regulators from the Hong Kong Securities and Futures Commission, and the Financial Reporting Council, echoed key concerns over poor valuation practices highlighting the need for more rigour, reliability and accountability in the business valuation process.

Speakers underlined the need for more robust frameworks to ensure clarity and consistency in financial reporting. They also expressed their support for professional bodies to unify the industry via consistent professional and technical standards, and the newly created Mandatory Performance Framework and Application, the guidance that CEIV credential holders are required to comply with.

The process of fairly valuing businesses is becoming more difficult largely due to the increasing complexity of corporate structures and businesses' diverse tangible and intangible assets. Business valuation practices must adapt.

A step toward robust financial reporting

Speakers from global accounting and valuation firms — Duff & Phelps, EY, PwC, Deloitte and KPMG — shed light on evolving challenges in financial reporting, including investor insights in portfolio valuation and the impact of corporate governance in business valuation, as well as market perspectives from the US, UK, Hong Kong, China and Singapore.

A wide variety of views on how to better establish public trust and de-risk the valuation profession were voiced in response to the regulators’ views, but most welcomed more robust regulatory oversight and consequences for professional misconduct. As a reporting template outlining the required levels of diligence and documentation for valuation professionals, the Mandatory Performance Framework and CEIV credential received broad interest and acceptance.

As CEIV continues to increase its footprint and gain traction in key markets, RICS will continue to engage with key stakeholders to drive home the importance of standardising requirements around supportable and auditable fair value measurements.

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