The three elements I would like to discuss are:
1. Establishing an Understanding with the Client: By providing
your client with an engagement letter or some formal consent
will reduce the possibility that either the valuation analyst or
client may misinterpret the needs or expectations of the other
party. Also, the understanding should include the nature,
purpose, and objective of the valuation engagement, the
client’s responsibilities, the valuation analyst’s responsibilities,
the applicable assumptions and limiting conditions, the type of
report to be issued, and the standard of value to be used
(AICPA, 2007).
2. Objectivity and Conflict of Interest: This just states that you as
the valuation analyst should perform your duties without
prejudices. The principle of objectivity imposes the obligation
to be impartial, intellectually honest, disinterested, and free
from conflicts of interest (AICPA, 2007). It states if there is a
conflict of interest, the valuation analyst should make
disclosures and obtain consent as required.
3. Professional Competence: This states that you do the job
accordingly just as you know-how. 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 (ACIPA, 2007).
SSVS applies the same general and ethical standards as other
standard-setting bodies. These guidelines help hold accountants
accountable by ensuring they are accurate and conducting their work
with the highest form of integrity.
References
AICPA. (2007). Valuation Servies. Retrieved on June 30, 2022,
from: https://www.aicpa.org/resources/download/statement-on-
standards-for-valuation-services-vs-section-100
