Three SSVS elements are:
Professional Competence:
An analyst should have a degree of knowledge of valuation principles and the skills
necessary to be able to identify, gather, and analyze the data using various valuation
approaches and methods. An analyst should be able to use professional judgment for
developing the estimate of value of a company. They should consider things such as the
subject entity and industry, subject interest, valuation date, and scope of the valuation
engagement to include purpose of valuation engagement, applicable standard or premise
of value standard, type of report to be produced as well as any federal regulations or
applicable professional standards that apply to the subject interest.
Objectivity and Conflict of Interest:
The analyst needs to be objective, with no bias towards the company or the prospected
valuation report. Objectivity is a mindset the analyst must have to ensure they are
impartial, intellectually honest, and free from conflicts of interest that could skew their
valuation of the company. They should follow the Integrity and Objectivity rule.
Using the Work of Industry Specialists:
An analyst will from time to time need to rely on the work of an expert in the industry they
are doing a valuation for. For example, if they are trying to value a car dealership, they
may pull in a car appraiser to verify the values of the cars are what they should be on
paper. By taking into account these third party specialists, they can ensure their values are
best aligned with fair market values. The analyst can include the third party’s written
report as part of their own report or at minimum must note the limiting conditions and
level of responsibility being assumed by them on the final valuation report.
The SSVS does a good job of outlining the qualifications, guidelines to be followed, and
different methods that can be used to provide a fair valuation of a company. Other
standard setting bodies have similar guidelines and practices in place to maintain
consistency in their own specific processes and reports provided.
AICPA. (2007, June). Statement on Standards for Valuation Services (VS Section 100).
https://www.aicpa.org/resources/download/statement-on-standards-for-valuation-services-
vs-section-100
