During the last 15 years, the global accounting model has 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, 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 have also questioned whether individuals conducting these estimates are subject to a consistent set of professional, technical and ethical standards.
Included in these comments are concerns by the Securities and Exchange Commission (SEC) about the quality, consistency and transparency of fair value measurements for financial statement reporting.
The current regulatory environment in the U.S. 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.
Addressing the problem
To address regulator concerns and protect the public interest on a global scale, the American Institute of Certified Public Accountants (AICPA), American Society of Appraisers (ASA) 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.
This CEIV credential is intended for professionals who perform fair value measurements for public company financial statement reporting purposes. It is offered to members and prospective members of each organization who work in the fair value arena. Encompassed within the CEIV credential program are mandatory performance requirements as well as ongoing engagement-level, risk-based quality review. Additionally, individuals will be required to meet rigorous qualifications and ongoing education and credential maintenance requirements.