6.05: Engagement letters for valuators’ reports
A CBV’s engagement letter, much like those of other professionals, sets out the commitments and expectations of the CBV before the work starts on the valuation report. Nobody likes uncertainty, especially when embarking on a journey whose outcome is only apparent at the end of the process.
The engagement letter is an opportunity for the client to receive written confirmation that the CBV understands the issues to be addressed in the report and what type of report will be prepared.
If a valuation report is to be prepared, the engagement letter should state if the report will be a calculation, estimate, or comprehensive valuation report. The letter should also provide details of:
- Approaches and methods to be used
- Estimate of fees, or the basis on which fees will be charged
- Timeline for the completion of the report
- List of information required to prepare the report
- Other responsibilities of the client, such as cooperation with the CBV during the process and agreeing to review any draft reports
Engagement letters ensure that the client’s expectations match those of the CBV.
An engagement letter is not a document to be signed lightly. Before signing, engagement letters should be read, understood, and checked to correct any errors and clarify misunderstandings.
Contact MVI if there are any issues in your engagement letter that you are concerned about.