A comprehensive guide for CPAs reviewing third-party business valuation reports. Learn essential quality control procedures, key elements to evaluate, and red flags to identify when assessing valuation work for your clients.
Should clearly state the purpose, valuation conclusion, key assumptions, and limiting conditions. Look for concise, defensible summary of key findings.
Comprehensive description of business operations, industry analysis, competitive position, and financial performance trends over 3-5 years.
Clear explanation of valuation approaches used, why others were rejected, key assumptions, and how the final conclusion was reached.
Verify the appraiser's credentials and experience:
Assess the reliability and completeness of information used:
Key elements to evaluate in income-based methods:
Critical factors in market-based valuations:
Review factors supporting marketability discounts:
Typical ranges: 10-40% for minority interests
*Actual discounts vary significantly based on specific facts and circumstances
Assess minority position considerations:
Typical ranges: 10-30% for non-controlling interests
*Actual discounts vary significantly based on specific facts and circumstances
Verify purpose, standard of value, valuation date, and scope of work are clearly defined and appropriate.
Examine financial statements, normalization adjustments, and trend analysis for accuracy and reasonableness.
Evaluate appropriateness of valuation approaches and whether conclusions are well-supported.
Compare results to industry benchmarks, prior valuations, and general reasonableness tests.
Verify appraiser qualifications, independence, and compliance with professional standards.
Review discount and premium calculations for appropriate application, empirical support, and magnitude relative to specific facts and circumstances.
Assess completeness of documentation, source citations, and clarity of presentation.
Determine if valuation conclusion is reasonable, defensible, and appropriate for intended use.
Partner with an experienced, credentialed valuation professional (CVA, ASA, or CPA/ABV) for valuation reviews and second opinions. Protect your clients with thorough, independent analysis of valuation work.