September 19, 2018

CPAs Currently Engaged in a Heated Beef With the AICPA Over the ABV Credential

A woman punching a man in an argument

Good morning and happy Monday, capital market servants. Boy do we have a fun one for you today.

It seems a group of CPAs/valuators has taken issue with the AICPA’s plan to allow non-CPAs to earn an Accredited in Business Valuation credential, accusing the AICPA of diluting the value of the ABV brand and doing so in a sneaky way so as not to ruffle feathers of current AICPA members and ABV holders. So much drama.

Michael Rapoport writes in WSJ:

Caught in the crossfire: companies that more than ever need specialists to help assess hard-to-value assets, like brand names and customer relationships. The demand for such services has grown dramatically in recent years into an industry that generates more than $4 billion in annual revenue, as those assets have grown more prominent on companies’ balance sheets.

That growing demand is what kicked off the fight in the first place. The American Institute of CPAs, the body that represents and accredits certified public accountants, decided to meet that demand by expanding the eligibility for its Accredited in Business Valuation credential.

The AICPA said in May that it would offer this designation—an ABV—to those who aren’t CPAs. The three-letter abbreviation is a denotation that financial professionals tack after their names, just like “CPA” itself.

But a group of prominent CPAs has objected fiercely. They contend making the ABV credential available more broadly will water down its significance and confuse businesses. They also say the AICPA acted behind closed doors, without consulting members who would be affected.

In a June open letter to the AICPA, the group points out the AICPA’s earlier stance that the ABV was special as far as designating how trustworthy you are directly due to the fact that it was only granted to CPAs, meaning average jerks off the street who meet the requirements can’t just grab one without first proving they’re reliable enough to earn a CPA.

“The ABV, unlike other valuation credentials, is awarded only to CPAs who are members of the AICPA. Accordingly, this credential represents the highest professional standards of any valuation credential and sets the ABV credential holder apart from other valuation experts,” the AICPA said on their website.

Florida Atlantic University professor Michael Crain and his various three-letter designations, who posted the open letter on Medium, called the move “an underhanded way” for the AICPA to recruit new members and therefore fees. AICPA Executive Vice President of Public Practice (and my longstanding accounting industry crush) Susan Coffey disagrees, saying “that is not what this is about.”

“The distinguishing characteristic of a CPA holding the ABV credential is adherence to fundamental principles of professional ethics contained in the AICPA’s Code of Professional Conduct,” writes Crain, who is director of FAU’s Center for Forensic Accounting. “These ethical principles are not simply words on a page; they are a way of life for a practicing CPA. One cannot live this standard by simply reading an organization’s code of conduct, attending a seminar, passing a test, obtaining some business valuation experience, and writing a check to join the AICPA.”

Non-CPAs already have a few options when it comes to securing business valuation credentials, including from the American Society of Appraisers, the National Association of Certified Valuators and Analysts, and the Royal Institution of Chartered Surveyors.

As it stands, ABV credential-seekers must be current AICPA members in good standing to qualify, and the credential runs $380. An exam and experience are also required, but the exam is waived for ASA or AM credential holders of the American Society of Appraisers, CFA credential holders of the CFA Institute, and CBV credential holders of the Canadian Institute of Chartered Business Valuators.

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