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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 13

National Association of Certified Valuation Analysts (NACVA) Professional Standards

The presently effective NACVA Professional Standards have been in effect for engagements accepted on or after January 1, 2008.

Preamble—General and Ethical Standards

An NACVA member must “remain objective, apply professional integrity, shall not knowingly misrepresent facts or subrogate judgment to others.”1 This provision requires “a written or oral understanding about the nature, scope, and limitations of services to be performed and the responsibilities of the parties.”2 NACVA members must “inform the client of conflicts of interest, significant reservations concerning the scope or benefits of the engagement, and significant engagement findings or events.”3 This provision prohibits valuations performed for contingent fees.4 An NACVA member is prohibited from issuing conclusions of value unless independence or lack thereof is expressly stated in the report.5

Author Commentary

Of course, CPAs face special issues when providing valuation services to audit (attest) clients. The Independence Standards Board issued 99–1, which proscribed performing both functions for the same client. The SEC adopted similar rules in November 2000 and January 2003,6 the latter of which simply incorporate the Sarbanes-Oxley Law7. Although there is no direct prohibition against CPAs performing both services for the same private company client, we think that it is a dangerous practice because in many ways ...

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