Three of the major elements required in the statement of standards
for valuation services or SSVA are as follows:
Professional Competence: "A valuation analyst should possess a level
of knowledge of valuation principles and theory and a level of skill in
the application of such principles that will enable him or her to
identify, gather, and analyze data, consider and apply appropriate
valuation approaches and methods, and use professional judgment in
developing the estimate of value (whether a single amount or a
range). An in-depth discussion of valuation theory and principles, and
how and when to apply them, is not within the scope of this
statement"
Objectivity and Conflict of Interest: "The code requires objectivity in
the performance of all professional services, including valuation
engagements. Objectivity is a state of mind. The principle of
objectivity imposes the obligation to be impartial, intellectually
honest, disinterested, and free from conflicts of interest. Where a
potential conflict of interest may exist, a valuation analyst should
make the disclosures and obtain consent as required by the
“Conflicts of Interest" interpretation (ET sec. 1.110.010 and
2.110.010) under the “Integrity and Objectivity Rule” (ET sec.
1.100.001 and 2.100.001)"
Establishing an Understanding with the client: "The valuation analyst
should establish an understanding with the client, preferably in
writing, regarding the engagement to be performed. If the
understanding is oral, the valuation analyst should document that
understanding by appropriate memoranda or notations in the
working papers"
I believe that these guidelines are similar to other standard setting
bodies because they are put into place to make sure that everything
is consistent and accurate. This is important because without these
guidelines, all companies need to be aware of their quality and these
standards help CPAs in terms of guidelines that should be followed.
Reference:
AICPA.org. (2007, June). Statement on standards for valuation services
(VS Section 100). AICPA.org.
