Connect with us!

A Potential Pitfall in Industry Risk Premiums

A Potential Pitfall in Industry Risk Premiums

Know your data!

Understanding the data that is applied in an analysis is important. Data that relies on standard industrial classification (SIC) codes can be misleading for industries that have changed—or did not exist—in 1987. As business models and industries evolve, it pays, as Bob Bridges explains in this article, to do a closer analysis.

(more…)

View On WordPress

The High Cost of Keeping Credibility

The High Cost of Keeping Credibility

Handling lawyers who coax you to work from their summary of the evidence

Expert witnesses have an ethical responsibility, as well as a business imperative, to ensure they review the actual evidence that supports their analyses. Because expert witness testimony can make or break litigation outcomes, consultants cannot risk having their testimony excluded by the trial judge or discredited by the…

View On WordPress

FASB Proposes Updates for Inventory Measurement

FASB Proposes Updates for Inventory Measurement

fasb-inventoryThe Financial Accounting Standards Board (FASB) has issued two standards updates with the intention of simplifying the measurement of inventory and eliminating the requirement for extraordinary items. Inventory (Topic 330): Simplifying the Measurement of Inventorywould eliminate existing requirements to consider the replacement cost of inventory and the net realizable value of inventory less an…

View On WordPress

Test Your Fraud IQ

Test Your Fraud IQ

red-flag-fraudEventually, everyone who works with or around money professionally comes across a particular transaction that just doesn’t look right. Lots of these eyebrow raisers turn out to be false alarms, and some even have odd, albeit legitimate and legal explanations. Still, there are those that defy explanation of any kind. If you’re not in the business of looking for fraud on a daily basis, will you…

View On WordPress

The Big “R”

Three key elements of fraud risk assessment

Organizations that have not performed a fraud risk assessment may be two-thirds more likely to suffer a fraud-related event, states KPMG-endowed fraud and forensic accounting professor Larry Crumbley. Learn the three key elements that a company’s fraud risk assessment should address.

(more…)

View On WordPress

Valuation of Customer Relationships

The valuation of customer relationships can be somewhat of a gray area for valuators. In many cases, the common valuation methodologies don’t apply, and the professional neglects to consider whether the determined value is consistent with a market participant’s perspective.

Valuation of Customer Relationships

The valuation of customer relationships can be somewhat of a gray area for valuators. In many cases, the common valuation methodologies don’t apply, and the professional neglects to consider whether the determined value is consistent with a market participant’s perspective.

PCAOB (AS) No. 18, Related Parties Explained

PCAOB (AS) No. 18, Related Parties Explained

Related-Party-AuditThe PCAOB recently issued Auditing Standard (AS) No. 18, Related Parties to strengthen auditor performance in the high-risk areas of significant unusual transactions and financial relationships, and transactions with executive officers. The change comes as the result of an internal review where the PCAOB felt the existing protocol did not contain sufficient procedures and was not properly…

View On WordPress

Calculation Engagements—A Post-Mortem Perspective

Calculation Engagements—A Post-Mortem Perspective

Calculation engagements require development standards

A proper calculation engagement requires planning, mutually agreed upon procedures, and adherence to professional standards. Otherwise, the valuation analyst and firm risk damaging their good name and reputation.

(more…)

View On WordPress

Standards Though the Eyes of a Practitioner

Standards Though the Eyes of a Practitioner

Reconciling compliance with multi-agency valuation standards

While standards exist to uphold the integrity of business valuation, multi-credentialed professionals can face a daunting task when trying to compare and comply with all guidelines across the spectrum of issuing agencies. This article seeks to root out possible conflicts and create clarity among standards so valuators may perform with…

View On WordPress

Food for Thought: Restaurant Valuation

Food for Thought: Restaurant Valuation

RestaurantAccording to a recent article in The Appraisal Journal, industry sales among the 616,098 restaurants in the U.S. totaled $425.6 billion in 2012. Chain restaurants make up nearly 45% of the industry population in the U.S., and at a growth rate of 2.2% are expected to overtake independent establishments by 2023. Between 2010 and 2012, 22,000 restaurants were sold for a total of almost $11…

View On WordPress

A Potential New Way to Value Patents

A Potential New Way to Value Patents

When the usual approaches won’t work

Technology and innovation expert and professor, Tim Swift, proposes an alternative to the traditional Market, Income, and Cost approaches to valuing a patent portfolio.

(more…)

View On WordPress

Necessary Adjustments

Deviations for biased cash flows

Cash flows vary, and traditional approaches need to take into consideration the downside or cessation probability; otherwise, the value of the entity is overstated. Setting the probabilities of “downside” and “cessation” risk drives the appraiser’s efforts in adjusting for biased cash flows. This article presents an approach that can be used to adjust the cash…

View On WordPress

Fitch Doubts IFRS Standards Implementation in U.S.

Fitch Doubts IFRS Standards Implementation in U.S.

Fitch-DoubtA Fitch Ratings report has shared serious doubts that the practice principles of the International Financial Reporting Standards (IFRS) would be fully implemented in the U.S. anytime in the near future, as the Financial Accounting Standards Board (FASB) turns colder on the idea. Three sticking points to the merger of the methods remain financial instruments, insurance and leasing. Financial…

View On WordPress

Mercer’s Five Big Valuation Issues

Mercer’s Five Big Valuation Issues

Five-IssuesIn case you missed it, Z. Christopher Mercer, ASA, CFA, ABAR, founder and CEO of Mercer Capital, was the keynote speaker at the American Academy of Matrimonial Lawyers (AAML) and the American Institute of CPAs (AICPA) 2014 bi-annual joint conference this year. His presentation concerned The Five Really Big Valuation Issues. They included: 1.) discount rates, 2.) control premiums and minority…

View On WordPress

Valuing Equity in Real Estate Holding Entities

Valuing Equity in Real Estate Holding Entities

Think like an investor, not an accountant!

If fair market value is to determine investor expectations and equity risk; then why do these factors receive limited or no consideration when opining on the level of impairments (investor concessions) ubiquitously referred to ask discounts? This article addresses the business risks associated with asset-holding companies’ equity that should be…

View On WordPress