Update on guidance regarding the company-specific risk premium

BVWireIssue #255-2
December 13, 2023

fair value for financial reporting
american society of appraisers (ASA), ASA, fair value, fair value measurements, conference, company-specific risk premium (CSRP)

Expect to see an exposure draft of guidance on the company-specific risk premium during the first half of 2024, reported Christopher Armstrong (KPMG), at the winter edition of the ASA’s Fair Value Conference last week. He is part of the group developing the guidance, and there will be a public comment period, he noted.

Preview: The group has issued a brief (click here) that provides a summary outline of certain key areas that will be explored in greater detail in the upcoming guidance, such as specific procedures for assessing discount rates and prospective financial information (PFI), as well as identifying and quantifying the elements of a CSRP. The guidance, which is voluntary, will be in the form of a Valuation in Financial Reporting (VFR) Advisory from The Appraisal Foundation (TAF).

Ray Rath (Baker Tilly US LLP) was the conference chair, and other topics included the future revision of the Mandatory Performance Framework (from the now-sunset CEIV credential), discount rates and volatility for contingent consideration, fair value audits, and the latest on the AICPA business combinations guide. Beside Armstrong, speakers included Marianna Todorova (Kroll), Mark Smith (AICPA), Mark Zyla (Zyla Valuation Advisors), Gary Roland (Kroll), Mark Edwards (Grant Thornton), Amanda Miller (EY), and Vincent Covrig (Crowe LLP). More coverage will be in a future issue of Business Valuation Update.

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