Reform of the European Union audit market forces certain companies to periodically rotate their audit firms. The new regulations also created a blacklist of services that company auditors cannot perform—and it includes valuation services. The opportunity that this creates for valuation firms is reflected in the recent acquisition of American Appraisal Associates by Duff & Phelps, which gives the firm a greater presence in Europe. "Valuation is one of the offers that creates the most significant conflicts of interest with audit," says Yann Magnan, the firm’s European head of valuations in an interview with Accountancy Age. "Mandatory rotation is forcing market shares to switch; it creates uncertainty and an environment where clients of these auditors need to think how they deal with valuation." The continued push for more transparency and good governance means more requests for third-party appraisals, he points out.
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