- Marianne Tissier
What's in a name?
All professions have their favoured jargon and acronyms but the valuation profession has a multiplicity of differently named qualifications and credentials. This lack of linguistic consistency is not just an inconsequential curiosity. There is also evidence that array of different terms used to describe a person qualified to provide valuations is holding back efforts to create a profession that is recognised as providing consistent standards around the world.
Valuation cedentials promoted around the world include Accredited Senior Appraiser; Chartered Surveyor; Chartered Financial Analyst; CPA Accredited in Business Valuation; Chartered Business Valuator; Certified Valuation Specialist; Certified in Entity and Intangible Valuation; Recognised European Valuer. And of course many of those who provide valuations (indeed, for intangible asset and business valuation, possibly the majority in many countries) hold an accounting rather than valuation qualification. A former Chief Accountant of the US Securities and Exchange Commission expressed concern back in 2011 at the perceived lack of a clearly defined professional identity for valuation professionals and the risks a lack of consistent professional standards created in the financial markets. More recently the chair of the IVSC Trustees, Sir David Tweedie, has described the situation in more colourful terms: “The problem with the valuation profession is that, at the moment, it is completely scattered. There are all sorts of credentials; nobody knows who the good guys are and who the cowboys are." The valuation profession is often contrasted with the accounting profession. In spite of there being well over 150 separate professional accountancy bodies internationally that operate and certify accountants independently, they have created an international federation that sets common education and professional standards. Moreover, there is consistency in the titles adopted by all these bodies for their certified members with most including the term Chartered Accountant (CA) or Certified Public Accountant (CPA) or a translation thereof. This helps create a common worldwide professional identity that goes a long way in obtaining recognition by markets, law makers and regulators wherever they may be. While some efforts have been made to agree common standards among the leading professional bodies involved in valuation, too few actively promote these and prefer instead to persevere with those they created themselves. And there are signs that the diversity of badges or titles for valuers may be getting worse rather than better. The IVSC is currently consulting on the introduction of a new credential. A business valuer who is a member of a professional organisation accredited by the IVSC will be able to use the quality mark “Member of IVSC BV accredited VPO”. Hardly a title that trips off the tongue! But even whilst this consultation is ongoing, the World Association of Valuation Organisations (WAVO) announced at the inaugural IVSC/WAVO Global Valuation conference held in June that it too is planning to introduce a new designation - WAVO WRV which stands for WAVO World Recognised Valuer. In the US, a decision by the AICPA to open its Accredited in Business Valuation (ABV) credential to non-CPAs has met with a storm of protest from current holders. AICPA has explained the reasons for and benefits of the change, saying that expanding eligibility for the ABV credential “helps to promote consistency, quality and transparency in the valuation marketplace.” AICPA also argues that CPA-led firms are looking for a single organisation that can provide appropriate training, credentialing, and ongoing support for all their employees, including both CPAs and finance professionals. Those opposing the move contend that, for years, the ABV credential has been promoted as a way for AICPA members to gain a distinctive mark of excellence and that offering the credential to non-CPAs promotes the perception that non-CPAs are interchangeable with CPAs for the purposes of business valuation engagements. It remains to be seen whether the level of protest is such that AICPA may be forced to reconsider its decision. It appears that most valuer organisations, and by extension, most valuers, prefer trying to hold on to what they have traditionally done in their territory than they are in reaching out to find common ground with others to grow a stronger profession that is globally recognisable. Furthermore, some professional organisations have global aspirations of their own and are competing with each other for members in order to sustain their continued operations. Pursuing common standards and titles is often seen as conflicting with this business model. Changing this mindset will undoubtedly be a challenge but is surely is essential if the profession is to thrive in the long term? Without agreement on a common identifier for qualified valuation professionals that can stand alongside those in accountancy, the confusion and risks that have already been highlighted by the SEC in the USA will surely spread and negativity and mistrust increase. Neither is this just an internal problem for the profession. Without trust, valuation loses its own value, with the result that investors and markets are faced with greater risk and uncertainty. If valuers cannot help themselves there is therefore a risk that regulators and governments might feel the need to step in, and when did that ever end well?