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New Business Valuation Standards for Accountants

By Robert C. Schlegel and Jason S. Thompson

In June 2007, the American Institute of Certified Public Accountants (AICPA) approved new business valuation standards effective for assignments accepted after Jan. 1, 2008 for all member accountants. The AICPA's Statement on Standards for Valuation Services No. 1 (SSVS 1), 'Valuation of a Business, Business Ownership Interest, Security, or Intangible Asset,' is a solid, well-reasoned set of principles on how to perform and report a valuation analysis. SSVS 1 complements other business valuation standards, such as the Uniform Standards of Professional Appraisal Practice (USPAP) and standards already in force by the American Society of Appraisers (ASA), Institute of Business Appraisers (IBA), and the National Association of Certified Valuation Analysts. (NACVA). These latter appraisal-oriented organizations have member numbers ranging from about 5,000 to 50,000, and include many accountants who regularly undertake valuation assignments for marital dissolution purposes.

The AICPA, however, with about 330,000 CPAs, is by far the largest organization with membership in every state. Previously, only AICPA members who were also members of one of the other organizations were required to adhere to the valuation standards of that other organization. The new AICPA standard will require all of its individual and firm members who are involved in business valuations to follow the newly issued standards. State Boards of Accountancy are likely to adopt the standards too, further obligating CPAs who may not be members of the AICPA.

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