Complex Fair Value Measurements And Material Weaknesses

Author : Zachary Huxley
Publisher :
ISBN 13 :
Total Pages : 0 pages
Book Rating : 4.:/5 (139 download)

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Download or read book Fair Value Measurement written by Zachary Huxley and published by . This book was released on 2023 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Calculating the fair market value of a good at a given date can be a highly complex process. It therefore often requires the involvement of valuation specialists, who act as consultants in various contexts (e.g., pre- or post-acquisition due diligence, auditing, and tax planning). Demand for the services of these specialists – who are typically professional accountants employed by accounting firms – has been growing over the past decade. Yet their understanding of what fair value is, their emotionally laden decision-making heuristics when faced with uncertainty and doubt, and the way they resolve dilemmas (when different valuation methods lead to irreconcilable values, for instance) have received surprisingly little scholarly attention, with the exception of the emerging literature on expert valuators in non-accounting contexts such as art or real estate. The focus of my thesis is the work of the professional accountants who specialize in valuing intangibles, such as private equity investments, lost damages in commercial disputes and goodwill. These valuations are required in a variety of contexts, the most common of which are mergers and acquisitions, tax reorganizations, litigation and financial reporting. I investigate three specific issues related to this topic from a sociological perspective. The first chapter is based on interviews with valuation specialists as well as their professional association's public and private discourses. It suggests that fair value measurements are fragile and require significant emotional involvement for valuation specialists to consider them to be reliable and justifiable to others. The second chapter builds on these same interviews, but focuses on the concept of fair value over its application. It reveals that practitioners understand the concept of fair value pragmatically, in that fair value measurements are deemed to be expedient, plural, and highly instrumental. As a result, practitioners focus mainly on the usefulness of their measures, which has significant implications, particularly in the context of financial reporting. Finally, the third chapter investigates the new forms of professional misconduct made possible by the financialization of accounting in general and by the lack of rules that govern the quality of fair value measurement more specifically. It proposes an original theoretical framework for analyzing how the profession responds to these new forms of misconduct, followed by a case study based on particularly hard to access (but information-rich) data on how the profession tries to respond to the new forms of misconduct that destabilize it.