Report Types and Level of Service
Different USPAP reports have different uses.
ABA principals are credentialed certified business appraisers. By both choice and professional requirement, ABA performs work and reports results pursuant to the requirements of the Uniform Standards for Professional Appraisal Practice (“USPAP”). Not all business appraisers do so.
In accordance with USPAP standards, ABA provides two levels of service and three types of reports:
Level of Service:
Opinion/Report: As inferred, in this instance the appraiser expresses a formal opinion of value based on a defined standard of value and specific to the interest being valued.
Calculations: In this instance, no opinion of value is expressed. Rather, in accordance with agreed engagement terms with the client/user, sets of estimates and/or ranges of possible values based on sound financial and valuation concepts are provided.
Self Contained/Comprehensive: As the name suggests, this report addresses all the factors that affect the subject valuation. Generally organized around the concept of defining the subject interest and the purpose of the appraisal, a comprehensive report also addresses economic conditions and industry data, the financial performance of the subject, the sales and marketing skill and advantages of the company, customer base, and competition. The appraiser would employ/address the three standard approaches (asset, income, and market) and select the most appropriate methods to determine the valuation opinion.
Scope Restricted/Preliminary: Confirmed be engagement terms, the client/user and appraiser agree to limit certain sections (example: industry research because the user/client is well aware of the state of the industry) and the appraiser does not provide the written documentation of all the factors that influence (example: the discount rate) some of the judgments made.
Review Report: Like the concept of calculations above, a review report does not express an independent opinion of the value of the subject interest. Rather, a review report provides technical commentary and discusses the technical error in an already prepared report of another. Cost is entirely dependent upon the quality and nature of the subject report. Usually, if there are technical errors, the review report will include a recalculated value based on “fixing the errors”.