Globalview Advisors sponsored the 12th Annual Fair Value Conference, which was a joint effort of the American Society of Appraisers (ASA) and the University of Southern California Leventhal School of Accounting, held this year at the Ronald Tutor Campus Center at USC in Los Angeles. The popular one day event continues to draw attention from business valuers, accountants, government agencies and educators for its important updates on the latest fair value issues and trends impacting financial reporting; distinguished line up of presenters including internationally recognized accounting and valuation professionals from the Big 4 and other leading accounting and valuation firms, as well as representatives from the FASB, IASB, PCAOB and the SEC. The conference offered valuable networking opportunities and 8 hours of CE/CPE credits.
Range of Presentation Topics and Speakers:
Fair Value Accounting Update—Adam Smith, Managing Director, PricewaterhouseCoopers, Transaction Services Practice. Adam provided accounting guidance on fair value and how it continues to change as well as a variety of accounting developments including changes to revenue recognition and lease accounting.
CEIV / MPF Update—Tony Aaron, Adjunct Professor, USC Leventhal School of Accounting, retired Partner Ernst & Young, Immediate Past Chair, Board of Trustees, The Appraisal Foundation. Tony provided information on fair value estimates, and the concerns regarding the quality of fair value estimates, which has led to the creation of a new designation, Certified in Entity and Intangible Valuations (CEIV). The CEIV designation will include performance requirements (the Mandatory Performance Framework (MPF)), practice review requirements among other features. Tony provided an update on CEIV / MPF developments.
Fair Value Auditors Panel—Mike Tully, Partner, KPMG Economic and Valuation Services Group; Austin Lee, Managing Director, Deloitte Valuation and Business Analytics; Amanda Miller, Executive Director, Ernst & Young Transaction Advisory Services; James Marshall, Principal, PricewaterhouseCoopers, Transaction Services. Tony Aaron, Moderator. The January 2017 release of two documents pertaining to the Mandatory Performance Framework (MPF) includes significant new requirements pertaining to minimum performance requirements for the completion of certain fair value estimates. The panel provided their reactions to the MPF and its likely impact on audit reviews.
IVSC Update—Kevin Prall, Technical Director, Business Valuation Standards, International Valuation Standards Council, Senior Manager, KPMG LLP; Adam Smith, Managing Director, PricewaterhouseCoopers, Transaction Services Practice. The IVSC has recently issued its 2017 International Valuation Standards and a variety of other documents have been released or are being updated. Adam provided an update on the activities of the IVSC including IVSC and The Appraisal Foundation efforts to expand their coordination.
Contingent Consideration Task Force Update—Gary Raichart, Director, Duff & Phelps; Sorin Maruster, KPMG. The Appraisal Foundation Task Force is developing valuation guidance for contingent consideration and released its first exposure draft of their proposed guide on February 28, 2017. Contingencies valuation is one of the most complex and challenging areas of valuation with limited guidance. Although the Task Force is focused on contingent consideration, valuation insights may be helpful for other valuations. The speakers provided an update on key issues pertaining to the exposure draft including a possible timeline for the future release of a final document.
Valuation Dilution—Amanda Miller, Executive Director, Complex Securities Valuation Group, Ernst & Young. Stock price dilution is an important area of concern for appraisers. Public companies present both primary and fully diluted earnings per share. Early-stage development companies often issue additional shares as a result of future financial rounds as well as through periodic option grants. Dilution from future securities issuances can have a potentially significant impact on the values of the existing securities of an entity. Guidance on the determination of valuation adjustments for future dilution is extremely limited. Amanda provided an update on thinking on valuation dilution and best practices in this area.
Prospective Financial Information—Dave Dufendach, Managing Director, Alvarez & Marsal Valuation Services. Historically, appraisers have often included language in valuation reports stating that management projections have been accepted as provided without review or any other procedures applied. Despite this significant qualification, appraisers have developed discount rates to apply to these “unreviewed” projections and concluded on fair value estimates based on the Discounted Cash Flow Method. Auditors have frequently expressed concern on this language and the quality of prospective financial information. The Mandatory Performance Framework includes significant performance requirements for appraisers pertaining to PFI. Dave provided a detailed discussion of best practices for handling PFI.
The American Society of Appraisers (ASA) is the oldest multidisciplinary appraisal nonprofit organization founded in 1936 and established in 1952 in the United States. ASA has become an effective professional affiliation of appraisers of all disciplines, working cooperatively to elevate the standards of the appraisal profession. ASA provides its members the most solid grounding in the appraisal principles that underlie all classes of property: real, personal, tangible and intangible. ASA is a global coverage organization active in Northern America (USA, Canada, Mexico), Europe, China, Japan and Australia.
The programs at the University of Southern California Leventhal School of Accounting are widely recognized in the top tier of accounting education worldwide. In fact, Leventhal is the only private university accounting program to be consistently recognized as excellent in all facets of accounting education. It resides within the highly rated Marshall School of Business, which provides its students opportunities to interact with the highest quality of faculty who are well known to be innovators in the areas of accounting education and critical research.