News, Resources and Updates

Posts in News and Updates
Appraisal Foundation: Final Version of Guidance on the Valuation of Contingent Consideration has been released

In February 2019, the Appraisal Foundation has released the final version of the Valuation in Financial Reporting Valuation Advisory #4 on the Valuation of Contingent Consideration. The new guidance highlights the use of scenario-based methods and of option pricing methods in the valuation of contingent consideration. The guidance sets the stage for a more extensive use of OPM modelling techniques in the valuation of contingent considerations and of Monte Carlo simulation if the payoff structure is path dependent or is based on multiple independent metrics.

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IPEV Guidelines: Final Version of International Private Equity and Venture Capital Valuation Guidelines has been released.

In December 2018, the International Private Equity and Venture Capital Valuation Guidelines Board has released the final version of the International Private Equity and Venture Capital Valuation Guidelines. The Valuation Guidelines were last updated in 2015 and the recent update reflects the continued experience of industry practitioners applying IFRS 13 and ASC Topic 820 (US GAAP) as well as incorporating other valuation guidance such as that reflected in the working draft of the AICPA's Guide to the Valuation of Portfolio Company Investments.

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PCAOB releases new standard on “Auditing Accounting Estimates, Including Fair Value Measurement” (AS 2501)

On December 20, 2018, the PCAOB adopted a new standard on “Auditing Accounting Estimates, Including Fair Value Measurement” (“new” ASC 2501). The standard replaces the “old” AS 2501 and rescinds AS 2502 and AS 2503. The PCAOB also amended a number of other PCAOB auditing standards which refer to accounting estimates to reflect the new guidance.

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AICPA: New Case Studies included in the Working Draft of the Guide to the Valuation of PE/VC Investments in Portfolio Companies

On December 17, 2018, the AICPA issued a working draft of a new case study of an “Investment in Non-Performing Distressed Debt” (Investment 6 - Case Study 13) in its "Accounting and Valuation Guide: Valuation of Portfolio Company Investments of Venture Capital and Private Equity Funds and Other Investment Companies". Investment 6 illustrates the valuation of an investment in distressed debt by a business development company from the initial transaction through subsequent measurement dates.

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AICPA: Working Draft on Inventory Valuation Guidance out for public comment

On November 19, 2018, the AICPA has issued an early working draft of the Inventory Valuation Guidance as part of a broader forthcoming release of the AICPA’s Business Combinations Accounting and Valuation Guide. This working draft provides nonauthoritative guidance and illustrations for preparers of financial statements, independent auditors, and valuation specialists regarding how to estimate the fair value of inventory acquired in a business combination in accordance with Financial Accounting Standards Board (FASB) ASC 820, Fair Value Measurement.

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AICPA: Working Draft – Accounting and Valuation Guide: Valuation of Portfolio Company Investments of VC and PE Funds

In mid-May, the AICPA issued a working draft of an "Accounting and Valuation Guide: Valuation of Portfolio Company Investments of Venture Capital and Private Equity Funds and Other Investment Companies". The Guide, developed by the AICPA PE/VC Task Force, provides guidance and illustrations for preparers of financial statements, auditors and valuation specialists.

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FASB Simplifies the Disclosures Related to Fair Value Measurement in ASU 2018-13: Implications for Private Funds

The Financial Accounting Standards Board continues on its path to improve the effectiveness and simplify the disclosure requirements in the notes to financial statements as part of its disclosure framework project. In August 2018, FASB released an Accounting Standards Update that has relevant implications for investment companies that report using U.S. generally accepted accounting principles (U.S. GAAP).

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IPEV Guidelines: Exposure Draft of 2018 edition

The International Private Equity and Venture Capital Valuation Guidelines Board (“the IPEV Board”) has recently published draft amendments to the International Private Equity and Venture Capital Valuation Guidelines for consultation. The Valuation Guidelines were last updated in 2015 and this year’s update reflects the continued experience of industry practitioners applying IFRS 13 and ASC Topic 820 (US GAAP) as well as incorporating other valuation guidance such as that reflected in the working draft of the American Institute of Certified Public Accountants Private Equity and Venture Capital Valuations Guide.

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CFA Institute: Exposure Draft of the 2020 Global Investment Performance Standards – Valuation Updates

On August 31, 2018, the CFA Institute released an Exposure Draft of the 2020 Global Investment Performance Standards. For firms that claim GIPS compliance, all “private market investments” that are included in the firm’s discretionary assets under management will be required to have an external valuation, valuation review or be subject to a financial statement audit at least once every 12 months.

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