During the last 15 years, the global accounting model has increasingly gravitated toward the use of fair value as the basis for measuring the financial statement values of assets and liabilities. Estimating fair value measurements often involves the use of sophisticated financial models, various valuation approaches and analytical assumptions and professional judgment.
Public statements by U.S. capital market regulators have called into question whether some of the individuals conducting fair value measurement estimates have the requisite training, qualifications, experience and expertise to perform this type of work. These regulators also question whether individuals conducting these estimates are subject to a consistent set of professional, technical and ethical standards.
Included in these comments are the SECʼs concerns about the quality, consistency and transparency of fair value measurements for financial statement reporting. The current regulatory environment does not require individuals who perform fair value measurements to have a credential or adhere to any uniform set of professional parameters (for example, documentations requirements, code of conduct or ethical requirements or quality control oversight). As a result, management of public companies and auditors often have difficulty evaluating whether the work done by valuation professionals adequately supports their conclusions of fair value that, in turn, may represent a material amount on financial statements, footnotes to the financial statements or both.
To address regulator concerns and protect the public interest on a global scale, ASA, the American Institute of Certified Public Accountants (AICPA) and Royal Institution of Chartered Surveyors (RICS) have championed the co-development of a credential to demonstrate member competency and enhance their professional standing. This effort is another example of the profession’s ability to collaboratively and proactively respond to market needs.
The Certified in Entity and Intangible Valuations™ (CEIV™) credential is intended for professionals who perform fair value measurements for public company financial statement reporting purposes. This includes estimating the fair values of businesses and/or business interests for goodwill impairment testing and stock compensation purposes, and intangible assets for purchase price allocation and impairment testing purposes.
By obtaining the CEIV credential, professionals performing fair value measurements for entity and intangible assets demonstrate their commitment to enhancing audit quality, consistency, and transparency in fair value measurements. Credential holders must also comply with the Mandatory Performance Framework, ensuring confidence in the consistency and transparency in their work, all to the benefit of the public interest.
Encompassed within the CEIV credential program are education and experience requirements as well as ongoing engagement-level, risk-based quality review.