The need for valuation for financial reporting purposes increased dramatically with the issuance of FASB ASC 805, 350, and 820, Fair Value Measurements and Disclosures. These valuations involve the allocation of a purchase price related to a business combination to tangible and intangible assets and are performed under a fair value standard, as defined by FASB ASC 820. These engagements tend to be very complex and are subject to a review by the external auditor under AU section 336, Using the Work of a Specialist (AICPA, Professional Standards).
As such, a BV expert must familiarize himself or herself with these standards and the various nuances of valuation under the fair value standard. With the issuance of FASB ASC 825-10, the allowed utilization of fair value for financial reporting has been expanded. This is reflective of the move toward convergence of United States generally accepted accounting principles with the International Financial Reporting Standards issued by the International Accounting Standards Board. Guidance in this area continues to evolve.
Primary referral sources for these engagements are CFOs or chief accounting officers of the purchasing company. In some cases, these engagements can also come from other CPA firms.
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