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The guides published by the American Institute of

Certified Public Accountants (AICPA) underscore the

various differences in the definitions of these value

standards, which can significantly affect the results of

valuations. These differences are illustrated below:

Deciding whether to hire a valuation specialist or

perform the valuation in-house.

Management must determine whether to engage the

services of a specialist or perform the LLTA valuation in-


To make the right decision, management needs to

analyze the risks and identify the costs and benefits of

each option. To approach this analysis, we recommend

that management ask the following questions:

• Do we have a clear understanding of the accounting

standards applicable to the valuation?

• Do we have personnel with the right technical

knowledge to perform the valuation?

• Do we have the resources we needed to perform

the valuation within the required timeframe?

If the answer to any of these questions is no, the company

will face a higher risk of determining estimates that are

outside the range of reasonable values and the additional

risk that the valuation results will be subject to stricter

scrutiny by auditors and regulatory bodies.

If management wishes to participate in the valuation

process, it may create a structure of shared tasks with

the specialist, and it may establish a valuation scope and

methodology that ensures that the valuation complies

with the applicable standards and focuses on the entity’s

most significant assets.

We recommend that companies involve their auditors in

valuation planning in order to get their input regarding

the risks or potential oversights that they believe could

arise during the valuation. The auditor should not be

viewed as being part of the team executing the valuation,

but instead should be seen as potentially offering

valuable input to help the entity avoid deviations from

the relevant accounting standards.

However, if management does decide to engage a

valuation specialist, it is important to select the specialist

based on the needs of the valuation project in question.

We recommend that management consider the following

points when evaluating potential specialists:

• Is the specialist familiar with valuations for financial

reporting purposes? The specialist should have

knowledge valuations to ensure the entity’s

compliance with all applicable requirements.

• Does the specialist have a work team that is qualified

to deal with the complexities of the valuation