Assessing the impact of SSVS No. 1

BVWireIssue #74-2
November 12, 2008

Robert Reilly, ASA, CPA/ABV, CM&A of Willamette Management Associates moderated a panel that included several BV heavy hitters in Las Vegas this week. Those of you who missed this ASA/AICPA presentation (the event drew some 1400 attendees) missed an informative and spirited discussion about the impact of SSVS No. 1 and what BV practitioners are seeing in various regions across the U.S. 

One of those discussions pertained to calculations versus opinions and how courts in different parts of the U.S. are interpreting them – some determine a calculation to be an opinion and some throw a calculation out as an opinion. 

One of the others offered insights about when an appraiser is required to adhere to the new standards, and when they’re not.  Consider: If appraiser A is looking at an opposing expert’s report and determines that report contains an error – if appraiser a makes a correction to that report, do they have to follow SSVS No. 1?  The answer? No, because the correction was not appraiser A’s opinion, but rather the correction of an error and the recalculated value based on that correction.  But if appraiser A is asked their opinion about the opposing expert’s report, then the appraiser is expressing their opinion and the appraiser must follow SSVS No. 1. 

Is this semantics? It may be, but the panel of experts believed there was a bright yellow line distinguishing these two situations.  In the first situation, appraiser A is fixing the multiple or fixing a formula or data point, but they didn’t pick the guideline companies, the methodology, or anything else—so they’re not expressing their opinion.  If their opinion is requested in court, one expert suggested a response something like “Give me a couple of weeks and more money and I can give you my opinion.”  The bright yellow line is differentiated by “I’m correcting the opposing expert’s mistakes” versus “I’m using my own judgment, approaches and procedures.” 

Look for more on the AICPA’s SSVS No. 1 and how it compares to the standards from other professional organizations and USPAP in an article penned by David Anderson, ASA of Amper Politziner & Mattia and Donald Wisehart, ASA, CPA/ABV, CVA, of Wisehart Inc., a  North Kingstown, Rhode Island-based CPA firm, in the upcoming December issue of the Business Valuation Update™ newsletter.  It will include a comprehensive comparison comparative table of all standards.

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