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A Reviewer's Handbook to Business Valuation: Practical Guidance to the Use and Abuse of a Business Appraisal by Timothy R. Lee, L. Paul Hood Jr.

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Chapter 12

The American Institute of Certified Public Accountants (AICPA) Statement on Standards for Valuation Services

The AICPA Statement on Standards for Valuation Services apply to all valuation engagements of members of AICPA accepted on or after July 1, 2008.1

Introduction and Scope

These rules apply to AICPA members “who are engaged to or, as part of another engagement, determine the value of a business, business ownership interest, or intangible asset.”2 However, these standards are inapplicable to AICPA members when they are engaged in an audit or review engagement.3

Author Commentary

Common sense might suggest to a client that their CPA, as the financial professional most knowledgeable about the client's business, is the most desirable or economical choice for other services, such as valuation services. However, we believe that the practice of providing valuation services to an attest (audit) client, even if permissible under the AICPA rules as well as those of government, is a very risky proposition and should be discouraged.

Overall Engagement Considerations

The AICPA business valuation standards compartmentalizes major engagement considerations according to the following topics.

Professional Competence

The AICPA standards require competence.4 In the competence determination, “the valuation analyst should consider, at a minimum, the following:

  • Subject entity and its industry
  • Subject interest
  • Valuation date
  • Scope of the valuation engagement [purpose, assumptions ...

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