The American Society of Appraisers (ASA) says that “important steps” have been taken to finalize the quality monitoring (QM) requirements for the Certified in Entity and Intangible Valuations (CEIV) credential. The ASA, AICPA, and the Royal Institution of Chartered Surveyors (RICS) offer the credential for professionals involved in fair value for financial reporting. All CEIV credential holders must submit to defined compliance monitoring requirements. “However, revisions are being made to those requirements in terms of timing and the potential integration of a firm’s existing QM process into the CEIV QM requirements,” says the ASA in a release.
Extra: Developments in the CEIV credential are just one of the topics on the agenda at the ASA/USC Fair Value Conference in Los Angeles on May 10.
Business valuation remains one of the niche services where the most CPA firms reported growth during 2017, according to the “2018 Top 100 Firms” from AccountingToday. (free registration required) About two-thirds of the leading firms report increased growth in their business valuation services, and BV is No. 8 in the rankings of the fastest-growing niche services.
Attest, SALT top list: The widest growth is reported in attest services and state and local tax, which hold the top two spots on the list, respectively. Rounding out the top 10 are industry specializations, technology consulting, international tax, M&A, estate/trust/gift tax planning, nonprofit organizations, and retirement plans.
Business valuation and forensics often go hand in hand, but some valuation experts are not qualified to get a certification, such as the AICPA’s Certified in Financial Forensics (CFF) credential. Because of this, the AICPA has launched two intermediate-level certificate programs that explore core and specialized forensic techniques. The certificates provide “new options” to CPAs seeking the CFF credential, “as well as to other financial professionals who wish to show competency in financial forensics but are not eligible to get the CFF credential,” said the AICPA in a release.
A three-judge panel of the 5th Circuit Court of Appeals has struck down the Department of Labor’s (DOL) fiduciary rule, agreeing with the plaintiffs that the DOL overstepped its statutory boundaries. The original proposed rules had included appraisers in the definition of fiduciary, but that was changed, first to carve out ESOP appraisals and then to remove all appraisals from the final rule. But the appraiser-as-fiduciary issue was not completely put to rest—there was to be separate future rule-making on the issue of appraisals and fairness opinions in the context of investment advice subject to the fiduciary requirements.
Really over? The DOL could request that all of the judges in the appeals court hear the case, rather than the three-judge panel, lawyers say. Also, the Supreme Court could eventually weigh in because at least one decision in another circuit court conflicts with the most recent case.
A flash poll conducted by Baker Tilly Virchow Krause LLP (Baker Tilly) reveals that 36% of fund managers specify qualified business income (QBI) deductions as the greatest challenge faced from the passage of tax reform. New IRC Code Section 199a allows a 20% write-off of QBI for sole proprietors, owners of S corporations, and members of partnerships/LLCs. “When calculating QBI deductions, the mathematics behind it can be exceedingly complicated,” Gregory Kastner, CPA, senior tax manager with Baker Tilly’s financial services practice, said. “Since you need to calculate the deduction at each trade or business level, structures having several partnerships can find this calculation to be a tedious process.”
Extra: The March issue of Business Valuation Update has the first of a two-part article discussing the problems the new QBI deduction poses for valuations of a pass-through entity under the fair market value standard.
If any of your clients need valuation-related work because of the new tax law, don’t wait for them to call you. Over a quarter (26%) of Americans don’t even know there was a tax bill in the first place, according to a recent survey. What’s more, of those who do know there is a new tax law, they don’t know much about it. NerdWallet, a personal financial planning site, did the survey, polling 2,000 U.S. adults on legal and illegal tax-saving strategies, tax bracket knowledge, concerns about filing taxes incorrectly, and understanding the new tax bill.
Many universities rely on the money they earn by licensing intellectual property they develop as part of their research activities. Analysis of data on eight universities show they received royalties at an average of between 3.5% and 4.6% and a median of about 3% of net sales, according to a blog post from ktMINE. The license agreements these universities (which include MIT, Stanford, Ohio State, and others) negotiated generally trend toward the healthcare industry. The three most active fields for licensing activity are pharmaceuticals, biotechnology, and healthcare products and supplies. All of the eight universities have licensing agreements for manufacturing and process intangibles, which makes sense because they typically patent their innovations. For more details on the ktMINE database, click here.
Shannon Pratt will celebrate a milestone birthday on April 12, 2018. While he has wound down his valuation practice, his friends want to help him celebrate his many years of service to the profession. He has helped us all through his contributions to establishing valuation as a profession, through his leadership (e.g., past president of the Portland CFA Chapter, one of the founding members of the ASA Business Valuation Committee, etc.), his writing numerous resources that we continue to reference, and his teaching of valuation principles to many of us. Please send Shannon a card or note to:
6663 SW Beaverton-Hillsdale Hwy #312
Portland, OR 97225
To celebrate 25 years of valuation in Romania, the National Association of Romanian Valuers (ANEVAR) has published a journal in English. ANEVAR is an independent (not-for-profit, nongovernmental) organization for the real estate, business valuation, personal property, and financial assets disciplines in Romania. ANEVAR supports 6,900 professional members and over 250 associated legal entities, carrying out valuation related activities in 40 territories and counties, and 11 centers in Bucharest.
The potential market rates for U.K. stadium naming rights grew to £135.6min 2017, an increase of over 80% on the 2013 market rates of £74.6m, according to a study by Duff & Phelps. However, the market here is underdeveloped, it says. In the U.K., Manchester United’s Old Trafford could command over £26ma season to offer seasonal naming rights to its 75,643-seat stadium, more than any of its rivals. Interestingly, the study found that, in North America, where naming-rights deals are very common, new sponsors can be reluctant to take on a ground that’s previously had someone else’s name on it, which explains why a new stadium is worth a premium.
People: Tim Christen has been named to the board of directors of CPA.com; he’s a former chairman of the AICPA and is currently chairman of Baker Tilly International … Laura Srsich has been elected chair of the board of Eide Bailly, and Jeremy Hauk has been elected as vice chair for 2018 … Larry Autrey, a managing partner at Whitley Penn, has been named North Texas Community Foundation’s “Professional Advisor of the Year.”
Firms:Duff & Phelps announced that it has signed a definitive agreement to acquire Kroll, a global firm involved in complex investigations, security, and cyber solutions; the transaction is expected to close during the second quarter of 2018 … O’Connor Davies Administration, a subsidiary of New York City-based PKF O’Connor Davies that manages cryptocurrency valuation, launched a new administration service offering for cryptocurrency hedge funds … BDO USA has acquired Casterline Associates, a Pennsylvania-based accounting and consulting firm focused on the affordable housing industry.
A discussion of transaction data on nonlisted REITs, LLCs, and LPs to value a minority, nonmarketable interest in a real estate entity is included. Also, case studies on how to apply this data in the market and income approaches are included.
BVLaw Case Update (March 27), with R. James Alerding (Alerding Consulting LLC) and Sylvia Golden (Business Valuation Resources).
The speakers review a number of significant recent court decisions, including key statutory appraisal rulings from the Delaware courts, a divorce ruling on a novel issue concerning S corps, a problematic trademark valuation case, and a Daubert-damages case.
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