Professional progress: Valuation organizations making strides

Point of view Mar 23, 2017

Two complementary sets of new standards and a new credential are changing the landscape of the valuation profession.

Working to improve quality and consistency

  • Following several years of development, 2017 is seeing significant progress towards a more unified and consistent valuation profession.
  • A joint task force comprised of the American Institute of Certified Public Accountants, the American Society of Appraisers (ASA) and the Royal Institution of Chartered Surveyors (RICS) has launched: 

    • A new performance framework, which establish standards for valuation professionals related to objectivity, professional skepticism, and documentation of their work
    • A new credential for those performing valuations for financial reporting purposes called the Certified in Entity and Intangible Valuation (CEIV) credential.
  • At the same time, the International Valuation Standards Council (IVSC) published a new set of its standards to improve their depth and relevance. Compliance with these new standards will be a more meaningful statement on the quality of the work performed.
  • While compliance with the new performance framework is only required for professionals who obtain the new credential, we encourage voluntary adoption by all valuation professionals. Widespread adoption of the new performance framework and the international valuation standards will improve the quality and consistency of fair value measurements. There is still more to do, but we are optimistic that the accounting and auditing profession and the valuation profession can work closely together to enhance the results for our mutual stakeholders.

Becoming a profession in the US

The use of fair value and similar measurements in financial reporting has significantly increased over the past two decades. In addition, the 2008/2009 financial crisis highlighted the interdependency of the global financial markets, and the increasingly prominent role that the valuation profession plays in preparing and auditing complex fair value measurements.

After the financial crisis, PwC, along with other stakeholders, expressed a view that participants in the global financial markets would benefit from stronger professional framework, credentialing for valuation professionals and more robust valuation standards1.

Focus from regulators in the US

In 2011, SEC staff speeches acknowledged that valuation professionals are one of many participants involved in the collaborative process of assisting management in the preparation of financial statements. At the same time, these speeches called for improvements in the valuation profession, including:

"Valuation professionals stand apart from other significant contributors in the financial reporting process for another reason, their lack of a unified identity."

Source: Then SEC Chief Accountant Paul Beswick, December 2011

The PCAOB’s inspections of auditors have also focused on auditing of fair value measurements, with over 25% of audit deficiencies relating to fair value measurement in recent years. In addition, the PCAOB is developing revised auditing standards related to auditing the work of specialists and accounting estimates, including fair value measurements.

The road to standards and a new credential

In 2014, partially in response to the comments from regulators and other stakeholders, the AICPA, ASA and RICS formed a joint task force to address many of the systemic concerns with the valuation profession.

The task force included work-streams related to establishing performance framework, qualification for a certification and related educational requirements, and an inspection, quality, and disciplinary mechanism. Collectively, the work-streams address the improvements called for by the SEC staff.

The new Mandatory Performance Framework (MPF) was finalized in January 2017 and all three organizations now provide credentialing for those that qualify.

"I would like to also acknowledge and encourage timeliness and quality in the ongoing important work to continually enhance valuation performance standards, credentialing, quality assurance, governance, and related matters…"

Source: SEC Chief Accountant Wesley Bricker, December 2016

Concurrent with the joint task force’s work related to a credential and performance standards, the IVSC began a project to significantly improve the depth and scope of its standards.

What is a profession without standards?

The Mandatory Performance Framework

The framework establishes a minimum level of diligence, rigor and documentation for valuation professionals. It focuses on “how much to do” rather than technical guidance on “what to do.”

The basic premise of the framework is that a valuation professional must support their work with sufficient detail to provide a clear and well organized link from the data and information gathered to the final conclusion of value. To comply with the framework, a valuation professional’s work must allow an experienced professional with no involvement in the engagement to:

Global valuation standards for a global economy

The IVSC was formed in 1981. It is a membership organization made up primarily of valuation professional organizations from around the world, including the AICPA, ASA and RICS.

While the IVSC has been issuing standards for several decades, an independent organizational review in 2015 found that its standards lacked sufficient depth and relevance to meet the needs of the global capital markets. As a result, the IVSC undertook a project to revise its standards, and issued new standards in January 2017.

Overview of the new valuation standards

The valuation standards address “what to do” when performing a valuation. This is in contrast to the performance framework, which addresses “how much to do.”

The new standards also provide a framework for the selection of valuation approaches and methodologies. While valuation will always include some amount of judgment, the standards provide guidelines for how that judgment should be applied.

"We now have a publication which can stand in comparison with the best of national standards."

Source: Chair, IVSC Board of Trustees Sir David Tweedie, January 2017


While the journey is not complete, the valuation profession has made significant progress. The performance framework and related credential establish a requisite level of qualification, experience and knowledge for valuation professionals. The valuation standards have the potential to enhance the quality, consistency and transparency in valuation methodology, process and documentation. However, the next step for the valuation profession is crucial – to ensure that adoption is widespread.

While compliance with the new framework is only required for professionals obtaining the new credential, we encourage voluntary adoption of the framework and the valuation standards by all valuation professionals to enhance quality and consistency across the profession.

Questions and answers

Q: What is the impact of compliance with the new standards?

A: The adoption of the mandatory performance framework, the CEIV credential, and the international valuation standards could be beneficial to financial statement preparers and users of financial statements.

We believe that these efforts have potential benefits to the financial reporting process, including the audit process. While fair value measurements are subject to the same overall audit standards as any other accounting estimate, the way in which fair value measurements are developed, documented, and reported may differ. These differences could affect the nature and extent of the audit procedures to be applied.

Q: Are there any significant clarifications in the new valuation standards?

A: One key change made to the valuation standards is clarifying that professionals are required to follow all relevant legislative, regulatory or other authoritative requirements, even if those requirements differ from the requirements of the valuation standards. Under prior versions of the standards, it was not clear how professionals could prepare a compliant valuation for financial reporting purposes when the IVSC defines fundamental terms like “fair value” and “market participant” differently than other standard setters, such as the FASB. This change makes it clear that compliance with appropriate local rules and regulations takes precedence.

Q: When will the new credential be issued?

A: The AICPA, ASA and RICS are ready to begin issuing the CEIV credential. However, candidates must take certain courses and pass examinations to obtain the credential, so it may be several months before the first credentials are actually issued.

Q: When are the new standards effective?

A: Adoption of the IVSC’s standards is voluntary for professionals in the US. However, the new standards are effective July 1, 2017, replacing the existing international valuation standards on that date. However, early adoption is allowed and encouraged.

The MPF is required for any professionals with the CEIV credential, but voluntary adoption by other professionals is allowed and encouraged.

Q: Where can more information be found?

A: More information on the MPF and the CEIV credential can be found at

More information about the IVSC can be found at


1Global valuation standards – charting a course for the future, Point of view, PwC, September 2013; The valuation profession – at a crossroads, Point of view, PwC, September 2013.

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Beth Paul
Strategic Thought Leader, US National Professional Services Group

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