• Skip to primary navigation
  • Skip to main content

EACVA

European Association of Certified Valuators and Analysts

  • Home
  • Association
    • EACVA’s Mission
    • Benefits of Membership
    • Classifications of Membership
    • Become a Member
    • NACVA / EACVA Professional Standards
    • NACVA | GACVA Standard Comparison Charts
  • Certified Valuation Analyst (CVA)
    • CVA Training and Exam
    • CVA Training and Exam Registration
    • Info Webcast: Certified Valuation Analyst (CVA)
    • The Core Body of Knowledge for Business Valuations
    • ANSI & NCCA Accredited
    • CVA Candidate Status
  • Business Valuation Events
    • Webcast – Around the Valuation World international
    • Annual International Business Valuation Conference 2023
    • Business Valuation Seminars
      • Live Web-Seminar: Valuation Meets ESG & Sustainability
    • Introduction to Business Valuation – Free Webcasts
  • European Business Valuation Magazine (EBVM)
    • Become an Author
  • Blog
  • Contact Us
  • Show Search
Hide Search

Company Valuation Specialists’ Interactions with Management and Auditors: A Field Study

Wolfgang Kniest · November 28, 2018

by Kyrre Kjellevold, Norwegian School of Economics (NHH), Department of Accounting, Auditing and Law

Management often relies on specialists for valuing complex fair value measurements (FVMs), auditors frequently rely on those FVMs as audit evidence, and the PCAOB has documented persistent problems in the audit of FVMs. Based on in-depth interviews of Norwegian audit partners and company valuation specialists, I provide evidence on how audit teams interact with company specialists, how company specialists view the work of auditors and auditor specialists, and the extent of pressure company specialists’ experience to conform to management measurement bias.

The findings indicate that auditors’ lack of valuation knowledge and auditor specialists’ lack of asset-specific expertise, lead to deficiencies in their understanding of how assumptions used in FVMs are interrelated and result in auditors focusing on the minutia of the individual assumptions at the expense of a “big picture” view. The findings further suggest that company specialists are not immune to management pressure and I document several tactics management employs to inflate their specialist assisted FVMs. Management pressure is highest for non-financial level 3 FVMs. These results corroborate and explain recent findings in financial archival literature on the reliability of FVMs and enhances our understanding of the audit quality deficiencies documented by the PCAOB and other regulators.

Download article here.

Organization

Reader Interactions

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Join EACVA today. Apply for Membership.

Learn More

Copyright © 2023 EACVA. All rights reserved.

  • Contact Us
  • Privacy Policy
  • Imprint