Report to the IAASB, IAAER, and ICAS Foundation - Unlocking the black box of fair value measurement for financial instruments: The role and perspectives of accounting firm-employed specialists

This study examines the preparation and evaluation of fair value measurements (FVMs) for financial instruments (FI) reported in the financial statements, through the lens of valuation specialists (“specialists” hereafter) who play a key role in the production of FVMs. Using qualitative methods, this study explores the interaction between valuation specialists and their clients (auditors and/or management) to identify: 1) the factors specialists consider most influential in their judgment and decision making when preparing versus evaluating FVMs; 2) the factors that are most influential to the information and communication exchange between specialists and their clients; and 3) whether the “customer” of the valuation service (auditors and/or management) impacts the factors specialists identify as important to their information / communication exchange, and their judgment and decision making process.