WebsterRogers LLP
Checklist for Adequate Disclosure of Gift Transfers in Business Valuation Reports

Does the valuation report disclose the following:

Yes

The identity of, and relationship between, the transferor and each transferee?²

Any position taken that is contrary to any proposed, temporary, or final Treasury regulations or revenue rulings published at the time of transfer?

The date of transfer?

The valuation date?

The purpose of the valuation?

A description of the property transferred?

A description of the valuation process employed?

A description of the assumptions, hypothetical conditions, and any limiting conditions and restrictions on the transferred property that affect the analyses, opinions, and conclusions?

The information considered in determining the appraised value, including all financial data used in determining the value of an ownership interest in a business that is sufficiently detailed so that another person can replicate the process and arrive at the appraised value?

The valuation procedures followed, and the reasoning that supports the analyses, opinions, and conclusions?

The valuation method utilized, the rationale for the valuation method, and the procedure used in determining the fair market value of the asset transferred?

The specific basis for the valuation, such as specific comparable sales or transactions, sales of similar interests, asset-based approaches, merger-acquisition transactions, etc.?

The valuer’s background, experience, education, and membership in professional organizations that qualify him/her to make appraisals of the type of property being valued?

Does the valuer meet the following independence requirements?

Yes

The appraiser is not the donor or the donee of the property or a member of the family¹ of the donor or donee, or any person employed by the donor, the donee, or a member of the family of either.

We take no shortcuts when your peace of mind is at stake. Our full-time, experienced business valuation professionals work diligently to protect your interests.

Notes:
¹Member of the family means (donor or donee=d),
an ancestor of d,
the spouse of d,
a lineal descendant of d, or of d’s spouse, or of a parent of d,
the spouse of any lineal descendant described above, including a legally adopted child.

2If the property is transferred in trust, the trust’s tax identification number and either a brief description of the trust’s terms or a copy of the trust instrument should be included in or attached to the gift tax return.

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CPA and CPA Expert Are Not Synonymous

Francis A. Humphries, CPA/ABV, CVA

When financial issues are involved, the CPA expert is a valuable litigation team member. But, be aware that CPAs’ career paths are increasingly leading to specialization. That’s why just any CPA won’t do. Some CPAs are experienced in litigation assistance and that, perhaps, should be the first criteria for selection. But, additional specialties must also be considered. The litigation subject matter should control this selection process.

Business valuation, family law, financial services, taxation, information technology, auditing, and other attestation business and financial consulting, and forensic accounting, are among the many specialties to consider. A single CPA can no longer satisfy all needs of all clients and, more importantly in this context, cannot claim expertise in all financial matters; that is particularly true since the Daubert decision. To assume that CPAs are experts in even the most traditional service areas, such as auditing or income taxation, is to court failure. How, then, is a specifically qualified CPA expert to be found?

The American Institute of Certified Public Accountants (AICPA) has adopted two specialty designations that CPAs can earn by examination — Accredited in Business Valuation (ABV) and Personal Financial Specialist (PFS) — and others will follow. Another credible organization, the National Association of Certified Valuation Examiners (NACVA), requires education and testing before credentialing a CPA as a Certified Valuation Analyst (CVA). NACVA announced a new credentialing program for CPA litigation specialists that produced its first Certified Forensic Financial Analysts (CFFA) in 2000.

Other respected organizations offer programs not exclusive to CPAs, but many CPAs have earned the right to their specialty designations, such as Certified Financial Planner (CFP), Accredited Senior Appraiser (ASA), and Certified Fraud Examiner (CFE). And there are important programs that don’t confer specialty designations, like the investment advisors examination and the AICPA Certificate of Educational Achievement program. The requirements for credentials awarded by organizations not so well known should be investigated. In specialties where there is no credentialing or testing, experience must be the criteria.

The South Carolina Association of Certified Public Accountants (803-791-4181) is a good place to begin an inquiry. The depth to which the search for expertise should go will depend upon the importance of the expert in the litigation strategy and, quite frankly, cost relative to the potential award. In any event, references should be obtained and consulted. An inexperienced or unqualified "CPA expert" could be worse than none at all.

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