Financial statements have to be presented accurately and fairly to enable readers to make sound judgments. Companies need valuation opinions for financial reporting from firms that are independent and can withstand scrutiny from auditors and regulatory bodies such as the SEC. The underlying valuation analysis involves an in-depth study of the financial statements of the underlying company and a keen understanding of the company’s industry and the market participants. Moreover, ongoing changes in accounting rules and regulations add complexity to this valuation process.
FFG Valuations possesses vast experience and technical knowledge to assist clients in complying with prevailing accounting standards. We have worked with many national, regional, and local audit firms to facilitate the achievement of the client’s financial reporting requirements as smoothly and seamlessly as possible. For certain publicly traded clients FFG Valuations also provides pre-acquisition valuations to assist management in meeting the accelerated disclosure requirements mandated in Accounting Standards Codification (ASC) 805.
Valuation assignments for Financial Reporting include the following:
- Allocation of Purchase Price: ASC 805 and IFRS 3 govern the allocation of purchase price in a business combination. FFG Valuations assists privately-held clients with purchase accounting under ASU 2014-18.
- Impairment Testing: Under ASC 350 and IAS 36, tests for impairment of goodwill is required either annually or upon a triggering event. FFG Valuations assists our clients in determining whether a full Step 1 impairment analysis is required. For private companies we can assess whether amortization of goodwill under ASU 2014-02 election is appropriate.
- Stock Based Compensation: Valuations for stock-based compensation falls under ASC 718 and IFRS 2. FFG Valuations provides audit-ready results that are mathematically sound. We assist our clients with complex Relative TSR plans as well as providing equity accounting services for reporting solutions
- Derivative Valuations: ASC 815 and IAS 39 requires certain financial instruments to be measured at fair value. Many securities issued in connection with share-based compensation or corporate transactions involve derivatives that require a valuation for financial reporting or tax purposes. FFG Valuations specializes in developing customized models and deriving supportable inputs for these valuations. Our experiences ranges from Monte Carlo simulation for path dependency, including least-squared regression for early exercise behavior to 3 dimensional lattice models to PDE methodologies for valuing a broad range of convertible bonds.
- Fresh Start Accounting: AICPA SOP 90-7 requires a company emerging from Chapter 11 bankruptcy to restate its balance sheet to fair value. The procedures utilized must be consistent with ASC 805. FFG Valuations clients rely on our expertise to provided supportable allocations of fair value for their fair value balance sheet.