Practice Inspection Checklist

Valuation Reports – Practice Standards 110/120/130

Practice Standard 110 – Valuation Reports - Report Disclosure Standards
For all Valuation Reports – disclosure should include the following items (1-20):
  1. No indication of inappropriate use of draft reports
/ Yes □ No □
  1. To whom the report is being provided
/ Yes □ No □
  1. Description of the shares, assets or interest being valued
/ Yes □ No □
  1. Effective date of the valuation
/ Yes □ No □
  1. Date of the Valuation Report
/ Yes □ No □
  1. Purpose for the which the Valuation Report is being prepared
/ Yes □ No □
  1. Name of the firm responsible for preparing the report, as well as the name of the Valuator when the report is prepared for litigation purposes
/ Yes □ No □
  1. Type of Valuation Report provided (Comprehensive/Estimate/Calculation)
/ Yes □ No □
  1. Statement that report was prepared by Valuator acting independently and objectively
/ Yes □ No □
  1. Statement that Valuator’s compensation is not contingent on an action or event resulting from the use of the Valuation Report
/ Yes □ No □
  1. Statement that the Valuation Report has been prepared in conformity with the Practice Standards of the CICBV
/ Yes □ No □
  1. Definitions for terms of value used
/ Yes □ No □
  1. With respect to the definition of fair market value: Valuation Report should indicate the extent to which special purchasers were considered (and reasons why)in the determination of fair market value
/ Yes □ No □
  1. Scope of review that clearly identifies the specific information relied upon by Valuator in arriving at a conclusion
/ Yes □ No □
  1. For Estimate and Calculation Valuation Reports: disclosure that scope of review is inherently limited and conclusion may have been different had a Comprehensive Valuation Report been provided
/ Yes □ No □
N/A□
  1. Sufficient information to allow reader to understand how Valuator arrived at conclusion (giving consideration to scope of review, intended purpose, type of report)
/ Yes □ No □
  1. Basis of valuation, approach and methods used
/ Yes □ No □
  1. Statement of key assumptions made
/ Yes □ No □
  1. Any restrictions that affect the Valuator’s conclusion such as the following:
a)Statement restricting use or report by persons for whom it was prepared and only for stated purpose
b)Statement denying responsibility for losses resulting from any unauthorized or improper use of the report
c)Statement giving Valuator right to make revisions and/or to further support the conclusion under specified circumstances such as when facts existing at the valuation date become apparent to the Valuator after the report is issued / Yes □ No □
  1. Conclusion as to value of shares, assets, or business interest being valued
/ Yes □ No □
For Comprehensive and Estimate Valuation Reports – disclosure should include items 1-26:
  1. Description of valuation calculations
/ Yes □ No □
  1. Where interests are other than common shares, a full description of the classes of shares and rights attached
/ Yes □ No □
N/A□
  1. Summary of relevant financial information
/ Yes □ No □
  1. Description of business being valued sufficient to enable the reader to understand the valuation basis and approaches adopted as well as the various earnings/cash flow risk factors present
/ Yes □ No □
  1. In the case of publicly traded securities: reference to trading volumes and price ranges
/ Yes □ No □
N/A□
  1. For Comprehensive/Estimate Valuation Reports: disclosure of any qualifications that affect the conclusion
/ Yes □ No □
N/A□
For Comprehensive Valuation Reports only – disclosure should include items 1-27:
  1. Description of economic context and industry outlook relevant to the subject business, taking into account the past and foreseeable future as well as conditions at valuation date
/ Yes □ No □
Summary of Initial Observations – Practice Standard 110
# / Observed Deficiency / Notes From Discussion with Member/Registered Student
Practice Standard 120 – Valuation Reports – Scope of Work Standards
  1. Evidence of Valuator obtaining clear instructions including the type of Valuation Report required (note: engagement letter is not a requirement)
/ Yes □ No □
  1. Evidence of work performed by person(s) having adequate technical training and proficiency (in financial analysis and/or business valuation concepts, principles and techniques)
/ Yes □ No □
  1. No indication of lack of due care
/ Yes □ No □
  1. No indication of lack of objectivity
/ Yes □ No □
  1. No indication of inadequate planning, execution or supervision of assistants
/ Yes □ No □
  1. No indication that Valuation Report and conclusion were not supported by sufficient evidence (based on inspection/inquiry/computation/analysis) considering the application of professional judgement by the Valuator, type of Valuation Report provided and its intended use
/ Yes □ No □
  1. No indication that access to essential information was denied or unavailable without notation in report of qualification of conclusion and limitation of scope of work
/ Yes □ No □
For Comprehensive and Estimate Valuation Reports – scope of work should also include items 35-43:
  1. No indication that Valuator did not obtain a sufficient understanding of the subject of the valuation
/ Yes □ No □
  1. No indication that Valuator did not obtain a sufficient understanding of underlying business operations
/ Yes □ No □
  1. No indication that Valuator did not obtain sufficient financial information relating to past results, future prospects and present financial position
/ Yes □ No □
  1. No indication that Valuator did not obtain a sufficient understanding of the relevant industry(ies)
/ Yes □ No □
  1. No indication that Valuator did not obtain sufficient information relating to the general economic conditions affecting the business operations
/ Yes □ No □
  1. No indication that Valuator did not determine the appropriate valuation basis and approach
/ Yes □ No □
  1. No indication that Valuator did not consider key valuation components and assumptions
/ Yes □ No □
  1. No indication that Valuator did not consider the necessity of relying upon the work of a specialist
/ Yes □ No □
  1. No indication that Valuator did not determine the necessity of obtaining written client/management representations
/ Yes □ No □
Summary of Initial Observations – Practice Standard 120
# / Observed Deficiency / Notes From Discussion with Member/Registered Student
Practice Standard 130 – Valuation Reports – File Documentation Standards
  1. Work performed was documented and files maintained in organized manner
/ Yes □ No □
  1. Form and extent of working papers suit the circumstances and needs of the engagement taking into consideration the type of Valuation Report
/ Yes □ No □
  1. Identities of individual(s) performing the engagement documented
/ Yes □ No □
  1. Copy of final issued ValuationReport retained on file
/ Yes □ No □
  1. Engagement letter or a memo retained on file, either of which summarises the purpose of the mandate, nature of instructions received from the person requesting the valuation and the type of Valuation Report required
/ Yes □ No □
  1. Summaries of key meetings, discussions and correspondence retained on file
/ Yes □ No □
  1. Information relied upon is retained on file (or accessible by the Valuator)
/ Yes □ No □
  1. Documentation of any conclusions of specialists relied upon (including copy of written report if prepared)
/ Yes □ No □
  1. Client/management representation letter or notation of why no such letter was obtained
/ Yes □ No □
  1. Copy of draft copy of Valuation Report where relied upon for representations
/ Yes □ No □
For Comprehensive and Estimate Valuation Reports – file documentation should also include items 51-53:
  1. Valuation approach and techniques selected documented, along with reasons for selection
/ Yes □ No □
  1. Documentation of key valuation components considered and valuation assumptions
/ Yes □ No □
  1. Valuation calculations – including necessary explanations and supporting documentation – retained on file
/ Yes □ No □
Summary of Initial Observations – Practice Standard 130
# / Observed Deficiency / Notes From Discussion with Member/Registered Student

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