Follow these 10 recommendations
to integrate Statement on Standards for Valuation
Services no. 1, Valuation of a Business,
Business Ownership Interest, Security, or
Intangible Asset, into your business
valuation practice. These guidelines are presented
as optional suggestions to members to facilitate
the adoption of the SSVS1 professional guidance
into the typical firm’s existing valuation
services practice.
1. The firm may designate one member as the
SSVS1 expert. Each member who
provides client valuation services should read and
be familiar with the statement. However, one
member may serve as the firm’s go-to person on
SSVS1 training, implementation, interpretation and
quality control issues.
2. Circulate copies of SSVS1.
Each member who performs valuation
services should have his or her own copy of the
statement. Consider filing a copy of the statement
in the firm library, in the same section as all
other AICPA professional standards. In addition,
implementing a sign-off procedure would confirm
that each valuation analyst received—and read—a
copy of the statement.
3. Hold a “statement implementation
meeting.” A meeting of all firm
valuation analysts (in person, if possible) to
review the requirements of SSVS1 and to discuss
the firm’s procedures to implement the statement
could contribute to improved communication and
valuation practice consistency among the firm’s
members.
4. Conduct internal training.
Inform all firm partners and staff
of the issuance of the statement. The valuation
analysts may develop and present internal training
on the statement to all firm members. Such
internal communications remind the partners and
staff of the professionalism of the firm’s
valuation analysts and the scope of the firm’s
valuation services.
5. Communicate with clients and referral
sources about SSVS1. Valuation
analysts may want to communicate the content and
the intent of the statement to the firm’s
recurring valuation clients and referral sources,
explaining any expected changes in the firm’s
valuation services, procedures and report formats.
While reinforcing the firm’s professional
reputation, this communication also serves as a
marketing tool that reminds clients and referral
sources of the scope of the firm’s valuation
services. The valuation analysts might consider
offering a client training program related to
SSVS1 for local clients and referral sources.
6. Sell clients on the benefits.
Prepare a list of expected client
benefits related to the implementation of SSVS1
that is accessible by all of the firm’s partners
and staff. This list could serve as a basis for
responding to client concerns (real or perceived)
regarding increases in valuation service fees or
increases in valuation report delivery time. A
list of client benefits would also help firm
members and firm valuation clients to understand
that the benefits associated with the statement
far exceed the costs.
7. Revise engagement letters and
procedures. Develop a new client
acceptance checklist/protocol for valuation
engagements and new engagement letter
language/conditions for valuation engagements.
Incorporate the engagement considerations,
terminology and reporting definitions of the
statement into the checklist and engagement
letter.
8. Draft a performance checklist.
Valuation analysts may want to
develop a new valuation engagement work plan or
checklist to document the performance of valuation
analysis procedures required by the statement.
This checklist or work plan would incorporate the
statement terminology and principles related to:
type of engagement, necessary financial
information, necessary nonfinancial information,
valuation approaches and methods considered.
9. Develop new report formats.
Valuation analysts may want to develop
new valuation engagement report formats and
valuation report checklists to incorporate SSVS1
report types, report content and report
disclosures. All valuation report “boilerplate”
language may be reviewed and updated to conform to
the statement.
10. Remain faithful to other
professional standards. After
the adoption of the statement, all valuation
analysts should be reminded of the standards and
practice compliance requirements of other
valuation professional organizations of which they
are members (for example, American Society of
Appraisers, Institute of Business Appraisers,
National Association of Certified Valuation
Analysts). Members should understand that the
provisions of the statement do not contradict the
professional requirements of other valuation
organizations. However, those organizations may
have their own requirements in addition to the
professional requirements of SSVS1. —
By Randie Dial , CPA/ABV,
principal analyst at Clifton Gunderson
LLP. |