6.06: Independence of a CBV
Healthy skepticism is a useful attitude to take when considering if there is any bias in a written report and business valuators’ reports are no different. Users should carefully consider the PURPOSE of the report. It is important to understand if the CBV is independent of the client, as this could have a bearing on the conclusion.
If the CBV is engaged to act independently (see below) the CICBV’s Code of Ethics requires that the CBV:
“Be and remain free of any influence, interest, or relationship which, in respect of the engagement, impairs the professional judgement or objectivity of the Member or which, in the view of a reasonable observer, would impair the professional judgement or objectivity of the Member.”
A CBV’s independence, while required for most engagements, is not the critical issue. The critical issue is that users of a valuator’s report KNOW whether the CBV is independent or not.
The CICBV’s Practice Standards explicitly require the CBV to act independently when preparing Valuation Reports, Expert Reports, Limited Critique Reports, Fairness Opinions, and Investment Entity Review Reports. The independence of the CBV should be confirmed in the report.
The CICBV’s Practice Standards explicitly recognise that CBV’s are not engaged to act independently when preparing Advisory Reports. In these circumstances, if there is a possibility that the report may be used by any party other than the engaging client, the fact that the CBV is not independent should be clearly stated.
Contact MVI if you have any concerns about our independence before engaging us to prepare a report. If our independence is compromised, we may need to decline the engagement.