Page 16 - Bankruptcy and Reorganization Services

Application of VS Section 100 to Business Valuation in Bankruptcy

In June of 2007, the AICPA Consulting Services Executive Committee issued Statement on Standards
for Valuation Services (SSVS) No. 1, Valuation of a Business, Business Ownership Interest, Security, or
Intangible Asset, to improve the consistency and quality of practice among AICPA members performing
business valuations. SSVS No. 1 was later codified in VS section 100 in AICPA Professional Standards.
AICPA members must follow this standard when they perform engagements to estimate value that cul-
minate in the expression of a conclusion of value or a calculated value.

The first three sections of VS section 100 ("Introduction and Scope," "Overall Engagement Considera-
tions," and "Development") address engagement considerations (professional competence, expectations
of clients, objectivity, independence, assumptions and limiting conditions, and so on) and development
(valuation and calculation engagements, valuation approaches and methods, valuation adjustments and
conclusion of value) and must be followed by the practitioner in valuing companies in bankruptcy.
These concepts are described throughout this practice aid.

The fourth section of VS section 100 ("The Valuation Report") establishes the parameters for valuation
reports. In addition, VS section 100 has three appendixes (A, B, and C) that provide further guidance on
how to interpret and apply the standard to valuation engagements.

Nonauthoritative Guidance

There is also a multitude of nonauthoritative publications on various aspects of business valuation that
could be applicable in a bankruptcy engagement. An all-inclusive listing would be impractical.

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