Some important developments in the area of fair value for financial reporting were covered at the 2021 ASA Fair Value Virtual Conference, held June 10. Conference chairs Bill Johnston (Empire Valuation Consultants) and Ray Rath (Globalview Advisors) put together a great full-day event, and here are some insights:

• COVID-19-specific disclaimers, particularly surrounding the risk of projections, are starting to be removed as firms get a better handle on their outlook;
• Lack of support and documentation for inputs and assumptions remain the most common deficiency in fair value work (it has improved, but it’s still a problem);
• The SEC will get more under the hood in terms of fund valuations (e.g., new SEC Rule 2a-5 will trigger more scrutiny by fund boards on the valuation process, which may be met with pushback due to proprietary methodologies);
• FASB will propose to bring back goodwill amortization (10-year straight line with some impairment testing) in a future exposure draft (the valuation community will have some strong comments about this);
• Environmental, social, and governance (ESG) factors will have a direct impact on value—just how much remains to be seen—more ESG-related disclosures will be required; and
• Artificial intelligence is increasingly being used to prepare valuations (especially in real estate) but is that really a valuation? (the topic is on the agenda at the International Valuation Standards Board).

A great deal more was discussed, and additional details will be in the August issue of Business Valuation Update.

Extra: Someone mentioned PAPM, but none of the panelists from the Big Four knew what it was. It stands for the popularity asset pricing model, which builds on CAPM. BVWire covered it last year—click here for more.