How relevant is financial reporting to business valuation professionals? Should there be one set of BV standards for all—or possibly two sets of standards, one covering “financial reporting” and another that covers “all other” valuation work? Is there a difference between “standards” and “best practices”? What authority is best qualified to issue standards for the BV profession? And what about convergence with international standards?
These are just some of the provocative questions asked by co-presenters Bruce Bingham and Carla Glass at the ASA BV Conference in San Diego last week. Bingham, current Chair of the IVSC team that’s developing a discussion paper on intangible asset valuation, and Glass, who just finished serving a six-year term as the sole BV representative on the Appraisal Standards Board, billed their session as a standards “free-for-all,” and were even willing to endure a possible “food fight.” But, “rather than just stir the pot,” Bingham said, “we’d like to put up these questions for your serious consideration and comment.”
One of the first questions: How many ASA attendees prefer the “old-fashioned” definition of fair market value? (The vast majority raised their hands.) How many prefer the FASB/financial reporting definition of fair value? (Two hands raised.) And yet, when asked if there should be one set of “united” BV standards, just over half of attendees raised their hands, while slightly less than half supported two sets of standards, one governing valuation for financial reporting and a second for “all other” BV work. Several individuals also braved the microphone to deliver their thoughtful if disparate views on this important topic.
Clarifying picture. At the end of the session, Bingham and Glass presented a diagram to help clarify the issues—but understandably, they want the diagram to appear within the entire context of their remarks on possible sources for BV standards, implementation, and enforcement. We’ll feature a full write-up in the next issue of the Business Valuation Update™. We’ll also continue to offer the BVWire™ as an open forum for discussion—so please email any comments and ideas to the editor.
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