by Peter Ott
At a February 2, 2017 meeting of the Appraisal Issues Task Force (“AITF”) in Washington, DC, William Johnson, ASA, confirmed that the Mandatory Performance Framework (“MPF”) and Certified in Entity and Intangible Valuations (“CEIV”) credential have been finalized and will soon be recommended for any valuer preparing fair value work used in US GAAP financial statements. The CEIV credential may be obtained through the ASA, AICPA or RICS and interested candidates must join one of these organizations and meet their respective membership requirements. To obtain the CEIV credential a candidate must also fulfil the following additional requirements:
- Have 3,000 hours of prior fair value measurement experience over the past five years, i.e., performing, mentoring, or supervising fair value engagements,
- Obtain education and training that addresses specific fair value topics, including knowledge in accounting and the regulatory environment, technical guidance related to valuation for financial reporting, the auditing process and the MPF,
- Successful completion of two CEIV exam modules that would demonstrate knowledge of: (i) the fair value measurement environment, guidance and related auditing requirements, and (ii) the MPF,
- Maintain ongoing education, experience and compliance requirements of the CEIV credential. In addition to ongoing education and training, a CEIV credential holder is required to perform at least 1,500 hours of fair value measurement work over 3 years and to be subject to mandatory engagement quality review and inspection by outside parties.
While the CEIV is not expected to be a requirement of the Public Company Accounting Oversight Board (“PCAOB”), the rigour being added to the self-regulatory process and fair value best practices could be relevant in assessing the internal controls on the preparation of fair value information used within the financial statements of reporting companies. The PCAOB is also expected to soon release a document on the audit of the work performed by specialists.
At the AITF meeting it was noted that other US government bodies (Internal Revenue Service and Department of Labor (re: ESOPs) may be watching the impact of the roll out of the CEIV credential. In four to five years it is hoped that valuers who follow the MPF and are CEIV qualified would demonstrate lower risk in the preparation of fair value information.