The AICPA Forensics and Valuation Services Executive Committee has voted not to adopt a proposed new glossary of terms into its valuation standards. This is welcome news for valuation practitioners who had concerns about making the new glossary part of the authoritative standards.

Massive overhaul: The new glossary was issued in exposure draft form with comments due January 31. The document, International Valuation Glossary—Business Valuation, is the result of a collaboration of the ASA, AICPA, RICS, TAQEEM, and CBV Institute and represents a massive overhaul of the existing version. It contains many more technical terms and methodologies, some of which have emerged since the current version was published in 2001. The AICPA sought comments on the content of the glossary and whether it should be included in the AICPA’s Statement on Standards for Valuation Services (VS Section 100).

In a letter to the BVWire editor (published here), Dr. Michael A. Crain (Florida Atlantic University), former chair of the AICPA BV committee, expressed concern that the inclusion of the new glossary in the standards could increase risk for practitioners and pointed out that it may be better to issue the glossary in nonauthoritative form, such as a practice aid. During a BVR “power panel” webinar, leading practitioners agreed that risk could be increased, especially in a litigation context. Some of the new glossary entries include methodologies that are unknown to some practitioners, so opposing counsel could ask the practitioner whether he or she used the methodologies listed. A “no” answer could seriously impact the expert’s credibility in the eyes of the court. An attorney who represents accounting professionals in professional liability matters also agreed, telling BVWire that the “proposed revised documents increase the potential for professional risk.”

Unanimous vote: The vote not to adopt the proposed new glossary into the AICPA valuation standards was unanimous, according to an announcement from the AICPA FVS committee. The announcement also noted that all feedback on the exposure draft was evaluated and will be shared with the glossary’s working group.