Page 51 - Family Law Services

Professional Designations

The Forensic and Valuation Services section offers two credentials: the Certified in Financial Forensics
(CFF) credential and the Accredited in Business Valuation (ABV) credential. In order to become a CFF
or ABV credential holder, candidates must successfully pass the CFF exam or ABV exam and meet
minimum experience and education requirements.

Professional Standards

In 2007, the AICPA Consulting Services Executive Committee issued Statement on Standards for Valu-
ation Services (SSVS) No. 1, Valuation of a Business, Business Ownership Interest, Security, or Intan-
gible Asset (VS sec. 100). The standard was written to improve the consistency and quality of practice
among AICPA members performing business valuations. These standards apply to all CPAs who are
AICPA members. Additionally, state statutes may incorporate AICPA standards.

SSVS No. 1 covers "overall engagement considerations," which include professional competence, nature
and risks of the valuation services and 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. Under the "development" of a valuation, SSVS No. 1 discusses the type
of engagement, hypothetical conditions, and the valuation engagement. When performing a valuation
engagement, SSVS No. 1 discusses what a valuation analyst should consider when analyzing the subject
interest, the consideration and application of appropriate valuation approaches and methods, and the
preparation and maintenance of appropriate documentation.

Under SSVS No. 1, an engagement to estimate value culminates in the expression of either a conclusion
of value or a calculated value. A conclusion of value requires more procedures to be performed than a
calculation and is an engagement in which the valuation analyst is free to apply the valuation approaches
and methods he or she deems appropriate in the circumstances to estimate the value of a subject interest
based on his or her professional judgment. A calculation is when the valuation approaches and methods
are limited by agreement with the client and do not include all the procedures required for a valuation
engagement. Many valuation professionals question if it is appropriate for an expert to testify to a calcu-
lated value versus a conclusion of value, the answer to which cannot be found in the standard. Due to the
limited procedures performed in a calculated value, the expert’s credibility could be brought into ques-
tion during cross examination.

Generally, the CPA should only consider circumstances existing at the valuation date and events occur-
ring up to the valuation date. fn 6 An event that could affect the value may occur subsequent to the valua-
tion date and is known as a subsequent event. Subsequent events are indicative of conditions that were
not known or knowable as of the valuation date, and the valuation should not be updated to reflect those
events. If the events are of such nature and significance that they may be meaningful to the court or trier
of fact, a disclosure can be made but should clearly indicate that the information provided regarding the
events is provided for informational purposes only and does not affect the determination of value as of
the specified valuation date. fn 7

fn 6 See paragraph .43 of SSVS No. 1.

fn 7 See footnote 6.

© 2020 Association of International Certified Professional Accountants 49