Auditors & CFOs: ‘We will not train the valuators’

BVWireIssue #65-1
February 6, 2008

Valuation specialists heard that statement throughout day one of the first annual National Fair Value Summit, co-sponsored by BVResources and the American Society of Appraisers in New York City this week.  Panelists from the “Big 4” accounting firms said it the most often, of course, and it bears repeating in full: “The auditors are not going to train the valuators on fair value measurements.”   In addition, Tony Aaron (Ernst & Young) stressed the importance of valuators explaining their fact patterns, showing their work—especially behind their schedules; developing sound analytical theory, and keeping up with the evolving literature on fair value for financial reporting.  Oh—and better keep to stated time limits.  “Be honest about the time to completion,” advised Dale Shepard, CFO, Vertex Data Science, who sat on the CFO panel.  “If you miss your deadline, rest assured that I will not use you again.”  If that weren’t enough—“I will make sure my entire business network knows about your failure.”

PE needs you.  Another hot conference topic: Must private equity firms heed the requirements of SFAS 157 and other FASB pronouncements (as well as guidelines from their own PEIGG, Private Equity Industry Guidelines Group)?  When an attendee asked the question over the lunchtime meeting, a FASB spokesperson was adamant that PE firms must comply.  “That’s all I wanted to hear the entire conference,” the attendee said.  At his session on SAS 73 reviews, Aaron indicated that more and more, auditors are recommending that PE firms hire valuation specialists—another sign of big opportunities in this field.  “Public relations is everything,” advised Shepard.  “I was at GE under Jack Welch, and 95% of his success was PR.”

Please let us know if you have any comments about this article or enhancements you would like to see.