AICPA to release final version of valuation guide in May 2019

One of the guide’s authors expects it to help improve the valuation process and be useful for regulators and auditors.

The American Institute of Certified Public Accountants will release the final version of its valuation guide for private equity firms in May 2019, with input received after the draft’s release earlier this year, according to one of the guide’s authors.

David Larsen, a managing director at global advisory firm Duff & Phelps and a member of the AICPA task force that wrote the valuation draft, said that 70 percent of the people who were surveyed at the 2018 Duff & Phelps New York Alternative Investments Conference on Tuesday think that the guide will be help improve the overall process, policies and practices of valuation.

On May 15, AICPA released the first draft of the valuation guide, which aimed to inform general partners as they come to their valuation conclusions by providing examples to help with estimating fair value. The AICPA asked anyone in the private equity industry to provide comments on the 600-page draft by August 15. Some of those comments called for inclusion of additional examples.

“We were asked to potentially add two additional examples, one dealing with distressed debt, one dealing with real estate,” Larsen told pfm on the sidelines of Duff & Phelps’ discussion with reporters on Wednesday about the outlook for regulation. “So, we’re considering doing that, and if we do that, we’ll have a short re-exposure period for those.”

Another release with changes can come at any time, but it will not affect the final version being released in May of next year, he said.

The guide isn’t only focused on helping GPs and limited partners, but any professional involved in the industry when it comes to valuations. The task force believes that the guide will also help regulators, auditors and preparers to be more rigorous and more robust in their valuations which, in turn, helps LPs, Larsen explained.