8-.2-1
Response
1. Kessel Kua
The two types of engagements used to estimate value are valuation and calculation. A valuation engagement is a one-sided estimate that a valuation analyst provides. The estimate is based on an approach that the analyst deemed necessary to use. A calculation engagement requires the valuation analyst to work with the client to select the best approach. Once an agreement is made, the analyst calculates the value estimated according to the selected approach. There are three approaches that analysts use to value a business. The first approach is an asset-based approach that focuses on the company's balance sheet. The second approach is the market approach. This approach takes into consideration the value of similar businesses. The third approach is the income approach which uses the capitalization rate or discount rate to estimate the value of a business.
The Standards for Valuation provide guidelines for AICPA members who engage in estimating the value of a business, business interest, security, or intangible asset for numerous purposes, including sales transactions, financing, taxation, financial reporting, mergers and acquisitions, management, and financial planning and litigation. A client who is facing bankruptcy may consider using an asset-based approach since it focuses on adjusting the balance sheet accounts to fair market value. A client who is considering a merger may utilize the merger and acquisition method which focuses on the value if both companies merge or one company acquires another company.
AICPA. (2018). VS Section 100: Calculation Engagement and Report FAQs. Aicpa.org. https://www.aicpa.org/resources/download/vs-section-100-calculation-engagement-and-report-faqs
Business Valuation Basics. Maryland Bar Journal. 2019;1(3):23. Accessed October 24, 2021. https://search-ebscohost-com.lopes.idm.oclc.org/login.aspx?direct=true&db=ofs&AN=139376454&site=ehost-live&scope=site
REPLY
2. Ganda Dakurah
AICPA Statement on Standards for Valuation Services No. 1 discusses two types of engagements for valuation services. The two types of engagement to estimate value are a valuation engagement and a calculation engagement. The valuation engagement requires more procedures than the calculation engagement. The valuation engagement results in a conclusion of value. The calculation engagement results in a calculated value. In a valuation engagement, when engagement calls for the valuation analyst to estimate the value of subject interest and the analyst estimates the value and can apply the valuation approaches and methods, he or she thinks are appropriate in the circumstance, and the results are expressed as a conclusion of value. In a calculation engagement, the analyst and the client agree on the valuation approaches and methods the analyst will use and the extent of procedures the analyst will perform to calculate the value of subject interest. The analyst will calculate the value in compliance with the agreement and express the calculated value result. A calculation engagement does not include all the procedures required for a valuation engagement.
Section 1.100.001 is attractive because the code has taken the responsibility of instilling integrity in an accountant’s morals. It calls for them to conduct all their transactions and business in truth and competently (AICPA Code of Professional Conduct, 2015). This trait is essential since an accountant guarantees that every financial statement and recording is authentic, building trust. In addition, integrity enables analysts to question illegal transactions. Due to this, integrity being in the code allows companies to grow since their employees are ethical and honest (AICPA Code of Professional Conduct, 2015). This credence keeps the economy balanced.
Reference
AICPA Code of Professional Conduct. (2015). AICPA American Institute of CPAs Retrieved from: http://www.aicpa.org/Research/Standards/CodeofConduct/DownloadableDocuments/2014December15CodeOfProfessionalConduct.pdf
3. Korinne Robertson
Remediation is characterized as the steps necessary to “clean up the mess” after a fraud, financial crime, or civil dispute has been discovered and examined, and the examination results have been prepared. First, and perhaps most important to the litigants or victims, the forensic accountant plays an integral role in the recovery of money and assets. Second, the fraud examiner or forensic accountant should support the client through the litigation process. This may include writing a report, preparing to testify, attending hearings and depositions, and completing other work on an as-needed basis. Thirdly, the forensic accountant or antifraud professional should return to the “scene of the crime” to determine how the offense was committed and how to prevent or deter its recurrence. Finally, if the issue was financial statement fraud: Where was the deficiency in corporate governance? When it comes to remuneration that might be available to victims is the compensation. Victim compensation is a direct financial reimbursement to a victim for an expense that resulted from a crime, such as medical costs or lost wages. The types of monetary remuneration that may be available to victims and plaintiffs include the following: Money stolen, Other assets stolen, Value lost Interest, Fines and penalties and Punitive damages.
Crime victim compensation. (n.d.). RAINN | The nation's largest anti-sexual violence organization. https://www.rainn.org/articles/crime-victim-compensation
Kranacher, M. J., & Riley, R. (2019). Forensic accounting and fraud examination. John Wiley & Sonsood