Page 10 - Business Valuation for Estates & Gift Taxes

 Valuation date

 Standard of value

 Preliminary assumptions and limiting conditions

 Parties to the contract

 Intended users of the valuation report(s)

 Level of service to be provided

 Type of report(s) to be provided

 Billing and collection terms and amounts

 Dispute resolution terms, including arbitration or mediation clauses

Valuation analysts are encouraged to seek advice from an independent attorney or a liability insurance
provider when drafting their engagement letters. Furthermore, these documents should be reviewed and
updated on a regular basis and, when necessary, valuation analysts should notify their malpractice carri-
er when introducing new services to their practice. fn 2

SSVS No. 1

In 2007, the AICPA Consulting Services Executive Committee issued SSVS No. 1, Valuation of a Busi-
ness, Business Ownership Interest, Security, or Intangible Asset (now codified in AICPA Professional
Standards as VS section 100, Valuation of a Business, Business Ownership Interest, Security, or Intan-
gible Asset, and referenced as such throughout the practice aid). The standard was written to improve the
consistency and quality of practice among AICPA members performing business valuations. These
standards apply to AICPA members who are engaged to estimate the value of a business, business own-
ership interest, security, or intangible asset. Practitioners should note that many states have incorporated
AICPA standards into their statutes governing professional services.

VS section 100 covers "overall engagement considerations," which include professional competence, na-
ture and risks of the valuation services, expectations of the client, objectivity and conflict of interest, in-
dependence, establishing an understanding with the client, assumptions and limiting conditions, and
scope restrictions or limitations. This also includes guidance on what a valuation analyst should consider
when analyzing the subject interest, the assessment and application of appropriate valuation approaches
and methods, and the preparation and maintenance of appropriate documentation.

fn 2 Examples of engagement letters can be reviewed in the SSVS No. 1 Toolkit at
www.aicpa.org/InterestAreas/ForensicAndValuation/Resources/Standards/Pages/standards-valuation-services-toolkit.aspx.

Page 8 ©2015, AICPA