AICPA Tries Again with Proposed Valuation Standard for CPAs

The American Institute of Certified Public Accountants (AICPA) on Monday released an Exposure Draft of Proposed Statement on Standards for Valuation Services (SSVS) Valuation of a Business, Business Ownership Interest, Security, or Intangible Asset. This is the second exposure of the standard, which was first published in 2005.

“The AICPA valuation standard will provide CPAs with a consistent set of nationally-recognized guidelines for the valuation of a business, business ownership interest, security or intangible asset in the unique context of a CPA’s practice,” Michael Crain, CPA/ABV, chair of the AICPA Business Valuation Committee, said in a prepared statement announcing the release of the exposure draft. “Once adopted, the standard will ensure that users of a CPA’s services benefit from a recognized approach to the valuation of these types of assets, coupled with the integrity, objectivity and competency that are imbedded in the services provided by a CPA.”

The purpose of this second Exposure Draft is to solicit comments on the proposed Statement from key stakeholders and other related parties in the CPA and business communities who are affected by valuation issues. This proposed Statement provides guidance to CPAs who are members of the AICPA for an engagement or any part of an engagement that determines the value of a business, an interest in a business, security or an intangible asset.

“More CPAs are offering valuation services today than ever before, and the demand for business continues to increase,” said Michael Ueltzen, CPA, Chair of the AICPA Business Valuation and Forensic & Litigation Services Executive Committee. “Some examples of the growing importance of and need for a valuation standard for CPAs can be evidenced by the recent FASB pronouncement on fair value measurements in financial reporting, as well as the new provisions in the new Pension Act for qualified appraisers and qualified appraisals in valuations for tax matters.”

The standard would apply to the AICPA members who perform valuation services in a variety of circumstances, including tax, mergers and acquisitions, litigation, financial planning and fair value measurements in financial reporting. The AICPA estimates that more than 25,000 CPAs currently provide Business Valuation and Forensic & Litigation Services.

“The users of CPA valuation services are expected to benefit from the standard, because it encourages consistency and disclosure in valuation development and reporting,” Edward J. Dupke, CPA/ABV, Chair of the Business Valuation Standards Task Force of the AICPA Business Valuation Committee, said. “Once the standard becomes effective, CPAs who are AICPA members will be required to comply with them when performing an engagement that reaches a conclusion of a value or calculated value.”

The comment period ends on December 15, 2006. Comments are specifically requested on the following issues:

  • Oral valuation reports
  • Interpretation No. 1
  • Using the Work of Specialists
  • Distinction between a Valuation Engagement and a Calculation Engagement

Comments may be emailed to BVSTDS@AICPA.org or mailed to:
Janice Fredericks
AICPA – Financial Planning
Harborside Financial Center
201 Plaza Three
Jersey City, NJ 07311-3881

Comment letters received on the 2005 Exposure Draft can be found online at http://bvfls.aicpa.org/Comment+Letters.htm

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