Explanation:
Statement on standards for valuation services:
AICPA members are required to follow the statement of standards for valuation services , Valuation of business , Business ownership interest , Security or Intangible asset when they perform engagements to estimate value that culminates in the expression of a conclusion of value or a calculated value.
<u>Major Elements:</u>
i) Sufficient evidence
Sufficient evidence must be gathered by such means as inspection, inquiry computation, and analysis to ensure that the business valuation conclusion and report are properly supported.
ii) Documentation
The valuation analyse must document matters , which are important in providing evidence to ;
a) Support the business valuation conclusion;
b) Justify decision made in the contact of engagements and;
c) Demonstrate that the engagement was carried out in accordance with the standards for valuation services of the AICPA.
iii) Minority , Majority and common issues
The valuation analyst should consider anything that may affect minority majority or control issues , including but not limited to:
- Laws
- Agreements and contracts
- Possible strategic or synergistic value
- Veto power
- Other relevant factors
iv) Scope of work
Scope should be supportable and consistent with expectation of participants and peers in the market for similar services and in compliance with these valuation standards.
