Open Letter from CPAs on the American Institute of Certified Public Accountants Change to Their Professional Certification in Business Valuation (ABV)

June 18, 2018

We, the undersigned licensed or retired Certified Public Accountants (CPAs), many of whom are current and former volunteer leaders in our profession, write collectively to express our concern regarding the recent decision by the American Institute of Certified Public Accountants (AICPA) to significantly change the qualifications to obtain the AICPA’s certification in business valuation — the Accredited in Business Valuation (ABV) credential.

Although the requirements to obtain the AICPA’s valuation credential have been revised several times since its inception in 1997, this new change represents the first time that the certification will be offered to non-CPAs. Such a seismic shift in the AICPA’s original goals for the credential creates considerable professional risk to the reputations of AICPA’s CPA members and current ABV stakeholders who are CPAs. All AICPA members and stakeholders should have been consulted prior to this important change.

The new qualifications to earn the ABV credential — specifically, making it available to non-CPAs — were not disclosed to those individuals to be impacted by the change before the change was put to a vote on May 22, 2018. This includes all AICPA members, all existing credential holders, CPAs as a whole, and the public. Prior to that time, disclosures as to the proposed change were made to only a limited few.

Business valuation services are vital to the economy and to the public that relies upon the results. A recent industry report estimates U.S. annual revenues from business valuation services as $3.9 billion, provided by about 136,000 establishments both large and small (IBISWorld, Industry Report OD4797 Business Valuation Firms in the U.S., February 2018). The competency of business valuation services providers is crucial; a specialty certification is a signal of that competency.

AICPA RECOGNIZES THE IMPORTANCE OF THE CPA/ABV COMBINATION

The issue of reduced standards impacts the public because services performed by licensed CPAs commonly benefit the public. As a result of many years of ethical professional service, the public generally views licensed CPAs in high regard and affords them a special trust. The AICPA recognizes this by stating on its website:

Individuals holding the CPA certificate are perceived to be highly qualified, ethical, and well-trained professionals within the financial services industry and the overall business community. People who hold both the CPA and the CPA/ABV provide the business and legal community confidence in the services they provide and a perceived advantage over competing valuation credentials.

https://www.aicpa.org/interestareas/forensicandvaluation/membership/abv-frequently-asked-questions.html (accessed June 13, 2018)

The AICPA’s “Application Kit — A Guide to the AICPA Accredited in Business Valuation Credential,” clearly distinguishes the benefit of being an ABV who is a CPA [emphases added]:

The ABV credential is granted exclusively to CPAs who demonstrate considerable expertise in valuation through their knowledge, skill and experience.
Achieve public recognition of the ABV as the preferred valuation professional
Distinguishes your practice with the powerful combination of the CPA brand and the ABV credential
Q. How does the ABV credential differ from other valuation credentials?
A. 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.

https://www.aicpa.org/content/dam/aicpa/interestareas/forensicandvaluation/membership/downloadabledocuments/abv-credential-application-kit-web.pdf (accessed June 13, 2018)

We agree with the AICPA that being a CPA/ABV is a coveted and important credential and that “this credential represents the highest professional standards of any valuation credential and sets the ABV credential holder apart from other valuation experts.” However, with the changes to the requirements for the valuation credential, the AICPA is diluting its original message, confusing the public, and harming the reputation of its CPA members. It is further impacting the financial well being of current and future CPA/ABVs by assisting non-CPA appraisers to better compete with CPAs. Ask any CPA/ABV and they will tell you that being an ABV backed by a CPA helps them compete at a higher level. These changes will negatively impact the bottom line for CPA/ABVs providing business valuation services.

THE AICPA’S MAY 22, 2018 CHANGE

On May 22, 2018, the AICPA’s governing body voted to allow non-CPAs to be eligible for the AICPA’s certification in business valuation.

https://www.aicpa.org/interestareas/forensicandvaluation/newsandpublications/abv-credential-open-to-qualified-finance-professionals.html (accessed June 13, 2018)

CPA stakeholders holding the ABV credential did not learn of the change prior to May 22nd, affording them no input to the elected members of AICPA’s governing Council before its vote. The undersigned believe the AICPA’s Council was not fully informed as to the implications of this change.

We believe the requirements for non-CPAs to receive the credential (shown below) are insufficient to replace the qualifications of licensed CPAs to perform valuation work for the benefit of the public. (Non-CPAs already have multiple ways to obtain a valuation certification from other well-known organizations, including the American Society of Appraisers, the National Association of Certified Valuators and Analysts, and the Royal Institution of Chartered Surveyors.)

https://www.aicpa.org/interestareas/forensicandvaluation/newsandpublications/abv-credential-open-to-qualified-finance-professionals.html (accessed June 13, 2018)

QUALIFICATIONS FOR A CPA LICENSE

In the United States, respective state governments determine licensing requirements for CPAs. Although CPA licensing requirements slightly vary across the states, they tend to require [a] a minimum number of upper-level college courses in accounting and tax; [b] a minimum number of college credit hours from an accredited college or university, specifying certain business courses other than accounting and tax, such as ethics, business law, and economics; [c] passing four rigorous CPA examination sections overseen by the respective state regulator: Auditing and Attestation, Financial Accounting and Reporting, Regulation, and Business Environment and Concepts; and [d] a person be of good moral standing. These licensing requirements are foundational to competency, integrity, and objectivity in serving the public.

THE GAPS CREATED BY THE CHANGE

The main gaps created by the recent AICPA decision to reduce the ABV qualifications fall into three areas: competency, trust, and ethics. These areas are obviously important to the public.

In 2007, the AICPA said this about business valuation services:

https://web.archive.org/web/20070108214849/http://bvfls.aicpa.org:80/Memberships/Business+Valuation+Practice.htm (accessed June 13, 2018)

The AICPA’s original message (which still stands) was that business valuations performed by CPAs for the public and clients were unique because CPAs have “extensive education, training and experience in financial accounting and analysis to determine objectively the value of business enterprises and assets.” Moreover, the AICPA highlighted the ABV credential for CPAs-only as a “distinctive mark of excellence.”

If the change approved in the May 22, 2018 Council vote is implemented, the AICPA will have effectively diluted its original message to the public and lowered the standards for its valuation certification. Originally, the ABV credential was a mark of excellence because it was issued only to CPAs who possessed the definitive characteristics described above. The AICPA’s new criteria for non-CPAs do not replace the characteristics espoused by the AICPA.

Further, the AICPA is very clear that an important part of its mission is public benefit.

https://web.archive.org/web/20070613123858/http://www.aicpa.org/About+the+AICPA/AICPA+Mission/ (accessed June 13, 2018)

In changing the requirements for the valuation credential to allow for non-CPAs, the AICPA seems to have missed the “fundamental purpose” of public benefit. What the AICPA now requires for non-CPAs to receive the ABV credential is not in the best interest of the public.

AICPA’S LACK OF TRANSPARENCY AND DIALOGUE WITH STAKEHOLDERS

The AICPA is a membership organization. It did not inform or consult with its members or other affected stakeholders about this important change prior to the May 22, 2018 Council vote. AICPA’s management failed to provide crucial transparency; members and other affected stakeholders had no opportunity to provide necessary feedback on the proposed change to the elected representatives of the AICPA’s governing Council.

AICPA’S FAILURE TO UPHOLD THE STANDARDS OF THE PROFESSION

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. These ethical principles are not simply words on a page; they are a way of life for a practicing CPA. The incorporation of these ethical standards of behavior and responsibility into one’s life starts early in a career, and a CPA is steeped in these high standards throughout his or her working life. CPAs holding the ABV specialty credential bring this unique standard of professionalism and quality to their valuation work. 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.

By neglecting to get input from the members and other affected stakeholders, the AICPA’s governing Council has deprived itself of necessary testimony and insights as to the importance of the ABV credential to the public and the potential lack of competency and integrity that the public would likely be subjected by the differing credential requirements for non-CPAs.

We urge AICPA’s governing Council and management to reconsider the change, be completely transparent in their actions, and listen to the concerns of their members and other stakeholders.

SIGNED

R. James Alerding CPA/ABV, ASA
AICPA Business Valuation Hall of Fame, 2002
AICPA Business Valuation Committee, Member, 1996–1998
AICPA Business Valuation Conference Committee, Member, Various
AICPA National Business Valuation School, Faculty
AICPA SSVS Writing Task Force, Member, 2002–2008
Indiana CPA Society Business Valuation Committee, Chair, 1983–1984
Indiana CPA Society Business Valuation Conference, Chair, 1983–1984

Neil J. Beaton CPA/ABV/CFF, CFA, ASA
AICPA Business Valuation Hall of Fame, 2002
AICPA National Accreditation Commission, Commissioner
AICPA Business Valuation Committee, Member
AICPA ABV Exam Committee, Member
FASB Valuation Resource Group, Member
AICPA Financial Accounting Standard 141/142 Task Force, Member
AICPA Cheap Stock Task Force, Member
AICPA Merger and Acquisitions Dispute Task Force, Member

Larry R. Cook CPA, ABV, CFF
AICPA Business Valuation Hall of Fame, 1999
AICPA Business Valuation Committee, Member, 1990–1996
AICPA ABV Credential Committee, Chair, 1997–2002
AICPA Business Valuation Task Force, Management Consulting Services Committee, Member, 1988–1990
AICPA Specialty Accreditation, Executive Committee, Member, 1990–1993
AICPA Management Consulting Services, Executive Committee, Member, 1995–1998
AICPA Forensics, Litigation, Business Valuation Committee, Member, 2005–2007
AICPA Partners for Growth, Co-Chair, 1994
Texas Society of CPAs Board of Directors , 1995–1997, 2000–2003
Texas Society of CPAs Lone Star Pathfinder Award, 2000
Texas, multiple business valuation and litigation committees, 1990–2003

Dr. Michael A. Crain CPA/ABV, CFA, CFE
AICPA Business Valuation Hall of Fame, 2007
AICPA Lawler Award, 2008
AICPA Sustained Contribution Award, 2016
AICPA Business Valuation Volunteer of the Year Award, 2001
AICPA Business Valuation Committee, Chair, 2004–2007, and Member, 2002–2004
AICPA ABV Examination Committee, Member, 1998–2004
AICPA Forensic and Valuation Services Executive Committee, Member, 2007–2010, ex officio 2004–2007
AICPA Journal of Accountancy Editorial Advisors Board, 2007–present
AICPA Litigation Services Conference Steering Committee, Member, 2000
AICPA Fraud Conference Steering Committee, Member, 1997
AICPA Fraud Conference Steering Committee, Member, 1996
AICPA Forensic and Litigation Services Committee, Member, 1992–1995
AICPA Editorial Advisory Board, CPA Expert, Member, 2006–2010
AICPA Technical Advisory Committee, ABV E-Letter, Member, 2001–2004
Florida Institute of CPAs Valuation and Litigation Services Section Steering Committee, Member, 2001–2004
Florida Institute of CPAs Valuation and Litigation Services Committee, Member, 1993–1999
Florida Institute of CPAs Valuation and Litigation Services Committee, Chair, 1991–1993
Florida Institute of CPAs Editorial Committee, Chair, 1998–1999
Florida Institute of CPAs Management Advisory Services Committee, Chair, 1990–1991
Florida Institute of CPAs Management Advisory Services Committee, Member, 1989–1990

Donald J. DeGrazia CPA/ABV/CFF
AICPA ABV Exam Writing Subcommittee, 1998
AICPA National Litigation Services Conference, Chairman
AICPA National Litigation Services and Family Law Steering Committee
New Jersey Society of CPAs Valuation Committee, Chairman
New Jersey Society of CPAs Matrimonial and Litigation Services Committee, Chairman
New Jersey Society of CPAs Valuation and Forensic Services Conference, Co-Chairman, 2008–2013

Mark O. Dietrich CPA/ABV
AICPA ABV Credential Committee, Member, 2006
AICPA Business Valuation Volunteer of the Year Award, 2006
AICPA National Healthcare Conference, Chair/Member, 2008–2014
AICPA Conference on Healthcare Reform, Chair, 2014
 AICPA Health Care Expert Panel for 2007–2010

Nancy J. Fannon CPA, ABV, ASA, MCBA
AICPA Business Valuation Hall of Fame, 2007
AICPA Business Valuation Committee, 1999–2002
AICPA ABV Credential Committee, 2003–2005
AICPA Annual Business Valuation Conference, Chair, 2001
AICPA Annual Business Valuation Conference Committee, 2003
AICPA ABV Review Course Committee, Chair and Instructor
AICPA Advanced Business Valuation Studies Committee, 2002

Michelle F. Gallagher CPA/ABV/CFF
AICPA ABV Credential Committee, Chair/Member, 2013–2017
AICPA ABV Exam Committee, Chair/Member, 2008–2018AICPA Business Valuation/Forensic and Litigation Services Conference Committee, Member, 2008–2012
AICPA Forensic and Litigation Services Committee, 2005–2008
Michigan Association of CPAs Board of Directors, 2012–2018
Michigan Association of CPAs Business Valuation Committee, Chair/Member, 2008–2018

David M. Gannett CPA/ABV/CFF
AICPA Business Valuation/Forensic and Valuation Services Conference Committee, Member
AICPA Litigation Services Committee, Member
AICPA/American Academy of Matrimonial Lawyers Conference Committee, Member
Massachusetts Society of CPAs Valuation and Litigation Committee, Chair, 25 years
Massachusetts Society of CPAs Valuation and Litigation Committee, Current Committee Member

Robert P. Gray CPA/ABV/CFF, CGMA, CFE
AICPA Business Valuation Committee, Member, 2002–2004
AICPA Awards Committee, Member, 2017–2018
AICPA Relations with the Judiciary Subcommittee, Member, 2014–2016
AICPA Forensic and Valuation Services Executive Committee, Member, 2014–2016
AICPA Forensic and Litigation Services Committee, Chair, 2011–2014, Member, 2007–2010
AICPA Forensic Litigation and Valuation Conferences, Co-Chair/Member, 2003–2011
AICPA multiple Forensic, Litigation and Valuation Services Taskforces, Chair/Co-Chair/Member, 2009–2018
Texas and Kentucky Society of CPAs, Forensic Litigation and Valuation Committees, Member/Conference Chair, 2014-Present

Mark I. Harrison CPA, ABV, CFF, Esq.
AICPA/American Academy of Matrimonial Lawyers National Conference on Divorce, Member, 2008–2016

James R. Hitchner CPA/ABV/CFF, ASA
AICPA Business Valuation Hall of Fame, 2000
AICPA Business Valuation Committee, Member
ABV Exam Committee, 1997, Member
AICPA Business Valuation/Forensic and Valuation Services Conference Committee, Chair, 1996, Member, 1995, 2007, 2008, 2011, 2012
AICPA ABV Exam Review Course, Member, 1997
AICPA Business Valuation Standards Writing Task Force, Member, 2000 to 2007
AICPA Business Valuation Course, Creator, 2005 to 2018
AICPA Business Valuation Volunteer of the Year Award, 1999, 2002
Georgia Society of CPAs Business Valuation Subcommittee, Chair
Georgia Society of CPAs Business Valuation Conference, Chair

Jerome Johnson CPA/ABV/CFF, CVA
AICPA Forensic and Litigation Services Committee, Member
AICPA Family Law Task Force, Chair
New Mexico Collaborative Practice Group, President
New Mexico Alternative Dispute Resolution Committee, Member

Dr. G. William Kennedy, CPA/ABV
AICPA Business Valuation Hall of Fame, 2003
AICPA Business Valuation Committee, 1998–2003
AICPA ABV Credentials Committee, Inaugural Year, 1997–1998
AICPA ABV Credentials Committee, Chair, 2011–2014
AICPA ABV Examination Committee, 1998–2011, Chair, 2002–2005
AICPA Mergers & Acquisitions Disputes Resolution Taskforce, 2007–2012
AICPA Journal of Accountancy, Editorial Advisor, 2005–2012

Robert W. Levis CPA/ABV, ASA, CFE
AICPA ABV Exam Review Task Force, Member

Sharyn Maggio CPA/ABV/CFF
AICPA Business Valuation Committee, Member
AICPA Certified in Financial Forensics Credential Committee, Member
AICPA/American Academy of Matrimonial Lawyers National Divorce Conference, Chair and Member
New Jersey Society of CPAs, Trustee on Board
New Jersey Society of CPAs Matrimonial Litigation Committee, Chair
New Jersey Society of CPAs Litigation Services Committee, Member

Michael J. Mard CPA/ABV, CPCU
AICPA Business Valuation Hall of Fame, 2000
AICPA Business Valuation Committee, Member, 1995–1998
AICPA Business Valuation Committee representative to FASB’s Valuation Resource Group, 1998–2011
Florida Institute of CPAs Business Valuation Committee, Member, early 1990s
Florida Institute of CPAs Litigation Services Committee, Chair, early 1990s
Florida Institute of CPAs Specialization Committee Member, early 1990s

L Gail Markham CPA/ABV/CFF, CFP, CFE
AICPA Business Valuation Committee’s New Initiatives Task Force, Member,2002–2004
Florida Institute of CPAs Valuation and Litigation Section, Chair, 2002–2004
Florida Institute of CPAs Valuation and Litigation Section and Committee, Member, 1991–2014
Florida Institute of CPAs Valuation and Litigation Annual Conference, Chair
Florida Institute of CPAs USPAP Task Force, Member, 1994

Harold G. Martin, Jr. CPA/ABV/CFF, ASA, CFE
AICPA Business Valuation Hall of Fame, 2012
AICPA Business Valuation Committee, Member, 1998–2001
AICPA National Business Valuation Conference, Chair and Vice Chair, 2010–2011
AICPA National Accreditation Commission, Commissioner, 2013–2015
AICPA National Business Valuation School, Faculty, 1997–2018
AICPA ABV Examination Review Course, Faculty, 2000–2015
AICPA CPA-Expert, Editorial Advisor and Contributing Author, 2002–2010
AICPA e-Alert, creator and editor, 1999–2006
AICPA Business Valuation Volunteer of the Year, 2000, 2004
AICPA ABV Champion, 2010–2018
Virginia Society of CPAs Board of Directors, 2002–2003
Virginia Society of CPAs, Business Valuation, Fraud, and Litigation Services Conference, creator and chair, 2001, 2005–2018

Glenn S. Newman CPA/ABV CFE MBA
AICPA Forensic and Valuation Services Executive Committee, Member, 3 years
AICPA Forensic and Litigation Services Committee Member, 3 years
AICPA Forensic and Litigation Services Conference, Chair, 5 years
AIPCA Certified in Financial Forensics Exam Writing Committee, Member, 2 years
AICPA Forensic and Valuation Services Strategic Planning Committee, Member, 2 years
AICPA, Economic Damages Task Force, Chair, 2 Years
AICPA Forensic, Litigation and Valuation Services, Volunteer of the Year, 2004
AICPA Journal of Accountancy, Editorial Advisor, 2002-Present

Chris Rosenthal CPA/ABC/CFF, ASA, AEP
AICPA Business Valuation Committee, 1994–1997
AICPA ABV Exam Committee, 1997–2000
AICPA Business Valuation Conference, Chair, 1995
AICPA Business Valuation Volunteer of the Year, 1999
AICPA Appraisal Foundation Advisory Council, Liaison, 1998–2013
Maryland Association of CPAs Forensic and Valuation Services Committee, Founding Chair and Current Member, 1995-Present

Steven E. Sacks CPA, CGMA, ABC
AICPA Business Valuation Hall of Fame, 1999
AICPA Business Valuation Committee, AICPA Staff Aide, 1988–2001
AICPA ABV Credential Committee, 1996–2001
AICPA ABV Exam Committee, 1996–1998
AICPA Consulting Services Division Leader, 1992–2001
AICPA Consulting Services Executive Committee, AIPCA Staff Aide, 1992–2001

Elizabeth A. Schrupp CPA/ABV/CFF, CVA
Texas Society of CPAs Forensic, Litigation and Valuation Services Conference Committee, 2016–2018

Sheri Fiske Schultz CPA/ABV/CFF
AICPA Business Valuation Committee, Member, 2001–2001
AICPA ABV Credential Committee, Member, 2012–2015
AICPA Forensic Valuation Services Conference Committee, Vice Chair, 2018–2019
AICPA Business Valuation Conference Committee, Member, 2001 and 2003
AICPA ABV Champion Task Force, Chair, 2012–2015
AICPA Editorial Advisory Task Force, Co-Chair, 2001
Florida Institute of CPAs Board of Governors, 1998–2000, 2006–2011
Florida Institute of CPAs Business Valuation/Litigation Services Section, Chair, 2004–2005
Florida Institute of CPAs Business Valuation/Litigation Services Section, Vice Chair, 2001–2004
Florida Institute of CPAs Business Valuation/litigation Conference, Chair, 2001

Ronald L. Seigneur CPA/ABV, CFF, ASA, CVA, CGMA
AICPA Business Valuation Hall of Fame, 2006
AICPA Council, Member, 2008–2010
AICPA National Accreditation Commission, Commissioner, 2011–15
AICPA ABV Credential Committee, Chair
AICPA Forensic and Valuation Services National Conference, Co-Chair, 2012–2013
AICPA Consulting Services Executive Committee, Member, 1998–2002
AICPA National Business Valuation School, Faculty, 2009–2016

Barry S. Sziklay CPA, ABV, CFF, PFS
AICPA Business Valuation Hall of Fame, 2001
AICPA Business Valuation Committee, Member, 1996–1999
AICPA Business Valuation Committee — Advanced Business Valuation Curriculum, Co-chair
AICPA National Accreditation Commission, Commissioner, 2002–2007
AICPA National Accreditation Commission to Business Valuation Committee, Liaison
AICPA National Accreditation Commission Strategic Planning for ABV Credential, Chair, 2003
AICPA Certified in Financial Forensics Committee, 2007–2010
AICPA Certified in Financial Forensics Committee, Body of Knowledge Subcommittee, Chair
New Jersey Society of CPAs, Trustee
New Jersey Society of CPAs Business Valuation Subcommittee of Litigation Services Committee, Chair, 1995–1996
New Jersey Society of CPAs Litigation Services Committee, Chair, 1997–1999

Robin E. Taylor retired CPA/ABV CFE CVA 
AICPA Business Valuation Hall of Fame, 2010
AICPA Forensic and Valuation Services Executive Committee
AICPA Business Valuation Committee, Chair and Member
AICPA Business Valuation/Forensic and Valuation Services Conference Committee
AICPA National Business Valuation School Faculty

Stacey D. Udell CPA/ABV/CFF, CVA
AICPA Forensic and Valuation Services Conference Committee, Member, 2013–2018, Chair, 2016–2017
AICPA Forensic and Litigation Services Committee, Member, 2014–2018
AICPA Certified in Financial Forensics Exam Development Committee, Member, 2009–2004
AICPA Family Law Task Force, Member, 2012–2018, Chair, 2014–2018
National Association of Certified Valuation Analysts Litigation and Forensics Board, Member, 2009–2012, Chair, 2010–2011

Jeffrey D. Urbach CFE, CVA, CPA/ABV/CFF

Judith Wagner CPA/ABV, CFF, CVA
AICPA Forensic and Valuation Services Executive Committee, Member 2009–2012
AICPA Business Valuation Committee, Member 2006–2009
AICPA ABV Champion

James L. (Butch) Williams retired CPA/ABV 
AICPA Business Valuation Hall of Fame, 2001
AICPA Business Valuation Committee, Chair, 1998–2001
AICPA Nominations Committee

Kevin R. Yeanoplos CPA/ABV/CFF, ASA
AICPA Business Valuation Hall of Fame, 2010
AICPA National Accreditation Commission, Commissioner, 2009–2011
AICPA Business Valuation Committee, Member 1999–2001
AICPA ABV Credential Committee, Member/Chair 2005–2008
AICPA ABV Exam Committee, Member 2012–2017
Arizona Society of CPAs Board of Directors, 2012–2014
Arizona Society of CPAs Business Valuation Committee, Member/Chair 1997–2018
Utah Association of CPAs Business Valuation Committee, Founding Chair 1996–1997

(update June 18, 2018: Some biographical information has been corrected)