Valuation work: is it worth it? By Rob Lewis

I'm don't know the requirements for becoming a chartered accountant (CA). My understanding is that the CA training and testing is far broader than the training and testing for becoming a Certified Public Accountant (CPA). I am a CPA (and a CFA charterholder and full-time valuation professional) who has seen the valuation efforts of many CPAs. As a group, those efforts are pathetic, although there are, of course, some exceptions. Most CPAs have as much business doing valuation work as a fish has riding a bicycle. And in the U.S., the American Institute of CPAs' Code of Professional Conduct makes it very difficult for an audit firm to provide valuation services to attest clients without impairing the audit firm's independence.

Let's look at the requirements to excel at valuation. In no particular order, those include: a high tolerance for ambiguity; a willingness to embrace an uncertain and ever-changing future; a wide-ranging curiosity; significant social skills (required for on-site interviews); an in-depth knowledge of economics and finance; a willingness to engage in conflict with clients when necessary (I'm glad the article points that out); and the ability to explain arcane and esoteric work in everyday English that a lay audience can understand. . .without feeling patronized. If that set of skills describes the CPAs you know, well, you've been hanging around with an entirely different group of professionals from the ones I've know for over three decades.

CPAs in the U.S. tend to be go-along-to-get-along people. That's because their client relationships provide an annuity of fee income. By economic necessity, that argues in favor conflict avoidance. Most of them would much rather look backwards than forwards.

Let me put it this way: If CPAs had been in charge of the U.S. 230 years ago, we Yanks would still be working for the King.

Thanks for the article. Very interesting perspective.

Warren D. Miller
Beckmill Research, LLC
Lexington, Va. USA

The trouble with valuation of certain assets like a brand is that it can be qualitative and subjective in nature. Where do you value an asset that can mean different values to different people. The value could be quantitative and also qualitative at the same time. Also like the book the Black Swans how do you know that the value that you use is the correct one in the first place. It is all too easy to say that brand is measured by goodwill when another would say that it should be how satisfied a consumer is. As an accountant and a marketer I believe both these issues should be addressed jointly by both professions working together to come up with continuously improving standards. Perhaps what is troubling to me is to see that economists are the ones that tell marketers how to learn and teach marketing and economists are deciding how accountants should conduct themselves in an economy of subprime and debt woes. It is about time that the profession that drives a business - sales and marketing and the profession that measures the performance of a business come together to form a joint association. How about the Institute of Marketing Accountants which I believe does exist in the US.

Fair value accounting which is used by most listed companies to indicate the value of the assets at that particular moment in time seems defective, when the ROCE is fueled by the hard slog of the sales and marketing departments. How good your assets are being utilised is only as good as how motivated field staff are by their team leaders and the human resource department. Finally, valuation should take into account of the sacrifice placed by the environment where now we suffer from choking smog here in Asia and rapid inflation because agriculture has been transformed into sweat shops to fuel the demands of consumers. Now that is valuation!