There was a full house at the ASA/USC 11th Annual Fair Value Conference in Los Angeles last week. BVWire was there, and here are a few takeaways from some of the sessions, all of which were excellent.
Comments are due June 24 on two exposure drafts related to the new fair value credential, Anthony Aaron (E&Y) reminded the audience (see the June 8 issue of BVWire). Aaron is the chair of the performance requirements workstream group for the Fair Value Quality Initiative designed to strengthen fair value in financial reporting.
When valuing a financial instrument, consider its principal market, advises Kristopher Shirley (SEC), who says the agency sees problems in this area. He says that, if you identify a market but can’t access it, you can’t rely on it for the valuation, but you can use it as an input.
The FASB will soon issue an invitation to comment about internally generated intangible assets, says Adam Kamhi (FASB),to determine whether this should be added to the FASB’s rule-making agenda (current rules don’t allow recognition on the balance sheet).
A proposed guide on valuing contingent consideration will be out in a “few months,” says Alok Mahajan (KPMG), chair of the working group under The Appraisal Foundation.
The three “pillars” of focus for transaction due diligence are: (1) the quality of earnings; (2) net working capital; and (3) debt (or debt-like) items, says Mike Kim (E&Y). Think of net working capital as the gas that fuels a car—it really makes a difference how much gas is in the tank, adds Razmik Libarian (E&Y).
Your help is needed in research on the role of specialists in developing and evaluating the fair value estimates used in audited financial statements. The University of Wisconsin-Madison is conducting a survey on this issue, announced Stephani A. Mason (DePaul University), who handed out the survey to the audience. You can take the survey if you click here (you’ll get a $10 Starbucks gift card).
More coverage of the conference will be in the August issue of Business Valuation Update.
Extra: Part 4 of BVR's Special Webinar Series on Fair Value continues on June 21 with Navigating a Fair Value Audit Review with Kesh Iyer (RSM) and Lindsay Hill (RSM).