AICPA proposes new framework

The AICPA is seeking input on a new framework to produce a more accurate and transparent method for CPAs to determine the value of financial instruments such as mortgage-backed securities, credit default swaps, complex bonds, and other derivatives.

This guidance will lay the foundation for a new AICPA credential, Certified in Valuation of Financial Instruments (CVFI), which is expected to launch later this year.

The exposure draft can be viewed in two parts on the AICPA website, aicpa.org. The first part, Disclosure Framework for the Valuation of Financial Instruments and the Certified in Valuation of Financial Instruments (“CVFI”) Credential, includes the following changes:

• Providing guidance on explaining the characteristics of financial instruments and disclosing how these securities have been valued in a clear way with consistency and transparency.
• Establishing the parameters of documentation requirements.
• Setting definitions of terms that may be unique to the framework.
• Providing a list of accounting, audit, and valuation standards and references to technical literature that applies to the framework guidance.

The second part of the ED, Application of the Disclosure Framework for the Valuation of Financial Instruments and the Certified in Valuation of Financial Instruments (“CVFI”) Credential, builds upon the first part.

The ED comment period is open through Sept. 26. CVFI credential holders will be required to comply with the new framework once it is finalized.