Originally, one of my colleagues from another firm was going to join me, but he’s unable to be here, so I’ll try and handle it for both of us

Is it totally without problem? No, but I think I’m satisfied it was the only practical way the Commission could have allocated its resources to bring this thing to a resolution and move on to the more fundamental issues that we’re talking about today.

This information can and should be independently audited

Valuation Research and Marshall Stevens are two of the largest independent valuation firms in the country, and the valuation units of the major accounting firms are direct competitors.

Based on a comment from one of the presenters this morning, I can say this, that the Big 5 accounting firms did not get into the valuation business until about 1983 or ’84.

In terms of personnel and the retention of personnel on their staff, it’s sort of interesting that the industry is rife with people changing jobs. Many, many people in the appraisal industry have worked for one, two, three or four different appraisal companies.

So this question about the retention of staff is not one that I have particularly great sympathy with, particularly since our firm is one of the sources for these accounting firms to develop expertise and valuation.

Neither now or at any time in the past have we believed that public accounting firms should be precluded from providing valuation services to non-audit clients. Accounting firms have just as much right as anyone to compete for business.

The valuation arms of accounting firms are good competitors. They provide excellent service at, essentially, competitive fee levels and, at times, they have recommended our firm to their clients where there is a perceived conflict.

We do feel that for any accounting firm there is a basic incompatibility between developing value information for a client and then auditing that same information. Let me give you an example.

In a business combination accounted for as a purchase, and the current FASB proposals may require that all business combinations be accounted for as a purchase, there is a lot of professional judgment required in separating out the fair value of tangible from intangible assets.

Further, additional judgment is required in determining the appropriate lives to be assigned to each asset or class of asset. The impact of these valuation assumptions on a purchase price allocation directly affects the balance sheet and the current as well as future income statements.

It has been our observation that when the same firm does the original work and conducts any subsequent audit orreview that there is often little or no independent review.

We have been in numerous competitive situations over the years in which we have lost a valuation assignment for allocation of a purchase price to a prospective client’s auditor.

Subsequently, upon asking the reason for the client’s decision we’ve been told that they chose to have their accounting firm perform the valuation assignment to allocate the purchase price because, “We were told the audit would go easier if we had them do the work.”

Alternatively, we have sometimes been told, “Well, your fee was installment loans Alaska lower, but our accountants said they would match your fee, and then we would save money because the auditor would not have to spend time reviewing the work.” This is the real world.

On the other side, we’ve also had numerous situations where our clients’ independent public accountants do carefully review our appraisal report. It is the audit firm’s valuation professionals who typically perform this review.