The proliferation of problems has outstripped the ability of the profession to keep up with it," says Greg Forsythe. "So, we need, as a profession, to get faster at identifying best practices. For instance, there's now best practices in contributory assets, and this filters into the coursework fairly quickly. "There may be a branding problem outside of the profession because most don't realize that the level of professionalism is as high as it is," said Steve Sherman.
But the standards might not be sufficient. As John Glynn said, "there's a least common denominator approach. As a simple example, ask the question of how to weight the three approaches. The standards offer very little guidance there, and very little meat on the bones. If there was a more robust set of standards that you could be confident that the appraiser used, the auditor could reduce the amount of work they have to do."
Jim Hitchner agrees, but differentiates between standards and procedures. "I don't want to get into a word game, but I think we've got standards. What we're doing now is coming up with procedures in areas of controversy. A lot of people probably changed how they were doing in contributory assets after they read the assets," he pointed out. Paul Beswick agrees. "Outsiders need to know that at least there's consistency in the though process, so there isn't too much diversity in execution. Conversion of standards is great, but it's a first step. Standards of practice is what matters now."
Valuation standards have been written as a set of guides for valuations no matter what the purpose," confirms Carla Glass. "But as soon as you get into different purposes, for instance tax valuations, you've got different practices. It's almost as if we need something in between," she commented.
Can you talk about procedural uniformity without talking about an enforcement arm? "The enforcement we have now is that practice aids from the AICPA and TAF and others are perceived to be authoritative, no matter their actual standing," said Hitchner.
At this point, topics such as contributory assets and in-process R&D have been tackled. Groups are working on valuing customer relationships among other topics. Paul Barnes says that the profession is looking for places it can take the noise created by confusion out of the profession. "We aren't trying to say there's one way to do anything, but at least get to a more finite list of methods and approaches to use depending on the facts and circumstances."
Tony Aaron did comment that between TAF and IVSC and the AICPA groups and others, there is in fact some coordination when it comes to best practices. So it's not quite as bad as it seems. But it's still not what you'd call "cross referencing."
Is there a need for more consistency in the standards and procedures process? FASB has a well published methodology of exposure drafts, so there's an argument that the BV profession should look to standardizing those across the profession. And also, perhaps, some participants discussed the fact that the prioritization process for which procedures are addressed first needs to be more public.
What are the organizations doing now? "It's unlikely that the associations will give up any control of their ability to make pronouncements, so we've got a problem there," said one attendee. And "just listing all the best practices guides in one place could have the negative consequence of locking in the status quo, thereby missing an opportunity for major improvements," as another said--"unless it's clear that this kind of summary is a living, breathing document," commented Tony Aaron.
- AICPA--IP R&D Aid and the Cheap Stock working groups succeeded. A third group on impairment which has split into two segments. And a fourth group is now looking at business combinations as per ASC 805.
- The Appraisal Foundation. Carla Glass commented on the minimal coordination between TAF working groups and others to not double up on this kind of work, after contributory assets and valuation of customer relations.