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Supreme Court of New York, Appellate Division

The following case was tried before the New York Supreme Court. One of the issues on which the court had to rule was the value of the parties? martial businesses, most important of which was the wife?s dental practice. A CPA was retained to provide a valuation of the dental practice. In actuality, the CPA merely provided calculated values, in accordance with SSVS, and never produced a valuation (conclusion of value). The CPA declined to give his final opinion as to the value of the dental practice because the data utilized in his calculation report came from the practice?s tax returns, and the CPA stated that he would have to audit the returns in order to prepare a conclusion of value. It is worth noting that valuation analysts are not required to audit underlying financials in order to provide a conclusion of value. In the case at hand, the wife?s attorney ?vigorously objected? to allowing the CPA to testify as to the value of the practice. The attorney?s position was that the CPA only produced a calculation of value (not a conclusion) and that a calculation engagement does not include all of the procedures required for a conclusion engagement and the analysis did not provide the degree of certainty which would have been afforded had the CPA prepared a conclusion of value. The New York Supreme Court dismissed the argument and allowed the inclusion of the CPA?s testimony utilizing his calculated values. It should be noted that there is no prohibition in either the standards or the courts to utilizing calculated values; however, as expressed above, a calculated value does not give the end-user the degree of certainty as to the final valuation and, as such, calculated values are open to more scrutiny.