Three of the major elements required in the statement on standards
for valuation services (SSVS) include:
1) 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". This refers to the importance of establishing what
services will be performed for the client and documentation that
both the client and analyst understand the scope of work to be
performed. Having this in writing keeps all interested parties
informed of what the expectations are for this work.
2) Scope Restrictions or Limitations --- "A restriction or limitation on
the scope of the valuation analyst’s work, or the data available for
analysis, may be present and known to the valuation analyst at the
outset of the valuation engagement or may arise during the course of
a valuation engagement. Such a restriction or limitation should be
disclosed in the valuation report". b This refers to the possibility of
information or data that won't be available for the analyst in the
process of the valuation work they will be performing. This could be
because the data simply isn't available or because the client will not
provide it for some reason. This needs to be noted in the valuation
report. b
3) 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". This means the valuation
analyst must perform the work with an impartial lens. If there is any
bias or conflict of interest on the part of the analyst, this must be
disclosed before the start of work and should only move forward if
consent is given by the client. You lose the confidence of the current
and future clients if they learn later that there was any dishonesty on
the part of the analyst.
SSVS elements are comparable with the standards set by other
standard-setting bodies in that they all have set these guidelines
requiring accuracy and integrity on the part of the analyst. Sharing
these similar standards allows for consistency across the board for
analysts and clients should feel confidence in knowing a valuation
analyst is bound by these standards.
References:
AICPA. (2007). Valuation Services. Retrieved on June 30, 2022, from:
https://www.aicpa.org/resources/download/statement-on-
standards-for-valuation-services-vs-section-100
