Ray Rath and Jeremy Burnstein of Globalview Advisors presented on several important fair value reporting issues at the 30th Annual California Society of Certified Public Accountants (CalCPA) Fall Series, held at the California State University, Fullerton Irvine Campus.
Topics covered included:
Fair Value Accounting Update—Accounting requirements impacting fair value measurements continue to change. The discussion highlighted recent fair value related accounting developments at the Financial Accounting Standards Board (FASB) and at the Private Company Council.
Contingent Consideration Valuation Considerations—Contingent consideration now requires valuation if included in the structure of a business acquisition. Valuation techniques can be extremely complex. Globalview’s discussion highlighted key thoughts of the task force developing technical valuation guidance.
Overview of the Fair Value Quality Initiative and the New Valuation Designation Certified in Entity and Intangible Valuations—The U.S. Securities and Exchange Commission (SEC) has expressed concern about the quality of fair value estimates several times in the past. As a result, a new designation and quality assurance process are being developed. Globalview’s presentation discussed key elements of the designation as well as a Mandatory Performance Framework which provides minimum requirements for performing certain valuations.
Determination of Market Participant Acquisition Premiums—The SEC has expressed concern about the development and application of “control premiums” in the valuation of entities. As a result of these concerns, a new, more accurate term, Market Participant Acquisition Premium (“MPAP”), is being used rather than the prior term “control premium”. Also, a guide is being developed to enhance development of these estimates in a fair value context. Globalview’s presentation provided a detailed discussion of the latest exposure draft on MPAPs.
Globalview’s detailed presentation at this three-hour conference can be found by clicking on the following link for the Fair Value Reporting Update.