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Faith Integration Essay
Javier Caycedo Medina
School of Business, Liberty University
Author Note
Javier E. Caycedo Medina
I have no known conflict of interest to disclose.
Correspondence concerning this article should be addressed to Javier E. Caycedo Medina
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Faith Integration Essay
Business valuation is practice that has created controversy through the years. This has led
many organizations to create standards and guideline for companies and individuals that perform
appraisals to follow, in order to appraise the business or asset on a fair market value valuation.
Throughout this course, the three traditional approaches to valuation, and how to perform its
methods, were the center and the basis of this course. However, it was very important to have a
previous advance understanding of how the financial statements and financial ratios are created
and evaluated, in order to fully comprehend how to develop any of the valuation approaches. In
the textbook, Hitchner defines business valuation as “the act or process of determining the value
of a business enterprise or ownership interest therein” (p. 19, 2017). In other words, there would
not be any valuation if there were not an individual or a party interest on a potential purchase.
Throughout this document, the principles and understandings of the business valuation concept
will be evaluated and contrasted with Biblical models. The intention of this essay is to see how
the advices and concepts from the Word of God can apply even in “secular” practices.
One of the most commons issues that was prevalent all throughout this course is the
constant misunderstanding of the standards of value. Hitchner is very clear when he says that
understanding standards of value is not an easy thing to do, and that it must be repeated every
time a valuation is engaged to make sure the right standard is chosen (p. 57, 2017). One good
Biblical example that can be compared to this topic is how King Solomon practiced wisdom by
always examining the situations first, and then make a decision. King Solomon always make sure
that his judgement was below God’s judgement, as it is written in Proverbs 12:15 “The way of a
fool is right in his own eyes, but a wise man listens to advice” (ESV, 2001). Another way to
express these words is to not let your personal motives and intentions be the motive of your
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actions and decisions, but instead it is necessary to look for wise advice. A person that is
performing an appraisal needs to understand that understanding the standards and applying them
to select the right approach(es) for the valuation goes first and above his or her own
understanding of the business or asset that will be appraised.
On the other hand, many of the work a valuator does is to make interpretations and
projections based on professional assumptions. It is important to make clear that the USPAP does
require the appraisers to “clearly and accurately disclose all assumptions, extraordinary
assumptions, hypothetical conditions, and limiting conditions used in [this] assignment” (The
Appraisal Foundation, p. 54). In other words, honesty and clarity are two important virtues that
are expected from an appraiser while performing a valuation. In the previous paragraph, there is
a clear instruction on understanding the standards so that there is a minimal amount of
assumptions; in this paragraph, it is being said that all it is acceptable to make assumptions as
long as they are clearly written and made evident. Even though this concept might sounds
contradictory, the intention is to make very clear that above any assumptions and limiting
conditions, honesty and integrity should always prevail above. Failing to do this could result in
many legal consequences not only for the appraiser, but also for the client or any other party
involved. The appraiser must understand that his or her work will have important impact in not
just the client, but also in every other entity that is part of any future transaction that is related to
the appraisal.
In addition to what is mentioned above, Hitchner also says that understanding the
standards is not the only complicated practice, understanding the meaning of the industry, and
even sometimes, the international context that apply to the standards is a challenge as well (p. 30,
2017). This means that even though there are several traditional standards of value, every single
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appraisal is unique to its application. This is why the premise of value is another important aspect
of a valuation. The premise of value represents the “framework under which all other
assumptions follow” (Hitchenr, p. 32, 2017). In other words it is very important for the appraiser
to also identify under what hypothetical situation the valuation is being viewed and preformed:
whether is in exchange or to the holder. This reiterates the sentence previously written, “Every
single appraisal is unique.” The word of God teaches that even though there are many differences
in His children, they all have the same Father (Malachi 2:10, ESV, 2001). By contrasting this
Biblical example to the business valuation world, and metaphorically labeling all of one
appraisal’s valuations as their “children,” it is fair to say that even though the all have the same
creator, and even though there might be some similarities among them, they are all unique to
how they were performed. In fact, they all should be treated uniquely in order to have a fair
market value as a result. This is a great example for appraiser to understand that even thought, as
it is mentioned above, all appraisals are different, once again, they all should be treated with
respect, honesty and integrity.
Conclusion
Lastly, it has been made very evident throughout the document that the most important
responsibility that an appraiser has is to practice and show a work ethic based on integrity. It is
also very important to understand all the factors that affect the value of what is being appraised;
however, staying in the truth will always bring a abundant long-term reward, and not a
ephemeral short-term benefit. The Bible says “Whoever walks in integrity walks securely, but he
who makes his ways crooked will be found out” (Proverbs 10:9, ESV, 2001). It is imperative for
an appraiser to follow the methods and guidelines provided by government and the USPAP, and
always doing so with truth.
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References
Appraisal Standard Board. (2020). 2020 - 2021 Uniform Standards of Professional Appraisal
Practice (2020-2021st ed.). The Appraisal Foundation.
English Standard Version. (2001). English Standard Version Bible Online. https://www.esv.org/
Hitchner, James R. (2017). Financial Valuation: Application and models (4th Edition). Published
by John Wiley & Sons, Inc., Hoboken, New Jersey.
