CEIV quality control requirement raises client confidentiality concerns

BVWireIssue #175-1
April 5, 2017

Attendees at the AICPA’s three-day prep class for the new Certified in Entity and Intangibles (CEIV) fair value credential raised an issue of serious concern to some: confidentiality of client information.

Here’s the story: All CEIV credential holders will have to submit a fair value engagement work file for a quality control review within 12 months after getting the credential. Some attendees had trouble with the notion of handing over a work file that contains confidential client information. Under the CEIV quality control process, the work file (selected by the practitioner) goes to the VPO that issued the credential (i.e., the AICPA, ASA or RICS), which would use staffers or volunteers for the review. Each VPO will handle its own quality control process. 

“We would have a real problem sending out a work file,” said one attendee, an in-house CPA who oversees purchase price allocations for acquisitions his company makes. “We’d love to have all of our people get this credential but this will give us pause.” Others felt their clients would be agreeable to this and pointed out that work files are already subject to outside inspection by, for example, the PCAOB.

Issue will be addressed: AICPA officials at the class assured attendees that the information in the work files will be kept confidential. The submission process will be a redactive one, so any confidential information can be deleted. The quality control process is still evolving, and confidentiality will be a major issue addressed, they say. Another attendee asked what should be put into an engagement letter that addresses this matter. The AICPA says it will come out with guidance along these lines, such as model language. Presumably, the other VPOs will do the same.

The CEIV prep class was conducted in New York City March 22-24 by Mark Zyla (Aquitas) and Mark O. Smith (AICPA). Zyla is the author of Fair Value Measurement: Practical Guidance and Implementation; Smith was a technical author on the Mandatory Performance Framework, a set of best practices CEIV holders must follow.For more information on the credential, there’s a special CEIV website that’s been set up.

Extra: In last week’s BVWire, we noted that the AICPA lets you take the CEIV exam before you have the required 3,000 hours of fair value experience. If you pass, you can hold yourself out as a “CEIV Candidate” until you actually receive the credential. We must point out that this is the policy of the AICPA and may or may not be the policy of the ASA or RICS.

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