FAQs about the CVA Certification Exam
Q: What is the passing rate of the proctored exam?
A: On average, about fifteen percent fail the proctored exam.
Q: What are the total number of CVAs?
A: 5,251 CVAs as of 2021.
Q: Where did the questions come from on the proctored exam?
A: The questions on the proctored exam come from many places. The general membership provides the bulk of the questions. Periodically, NACVA contracts with experienced (five years or more in valuation practice) valuers to read a resource and generate multiple choice/true-false questions. Questions also come from The Value Examiner authors. Once the questions are received by NACVA, three contracted exam Q&A consultants gather them together, and with their team of 20+ subject matter experts (SME), review each question. Each question must be documented—where, if readily identifiable, is the concept discussed in the literature, do the multiple choice responses reflect enough difference so there is one correct choice, is the answer clear and correct, where does the question fit within the Body of Knowledge (BOK), etc.? After the Exam Development Team has completed its work, the new questions go to the Valuation Credentialing Board (VCB) for approval and potential inclusion into the Exam Database. The VCB accepts or rejects questions.
Q: Who decides what questions are in the proctored exam?
A: The VCB, with psychometric input on question validity.
Q: How do we know the proctored exam is valid?
A: The BOK summarizes all of the content areas required of valuators. The BOK, and the percentage of the proctored exam that should come from each content area of the BOK, was recently updated by an international panel of valuation experts and was corroborated in a validation survey by over 100 valuation experts. The questions on the proctored exam are tightly tied to the BOK—each question is coded with the area of the BOK that it tests, and the questions were selected for each version of the exam to match the required test percentages and to have appropriate psychometric characteristics. The psychometric analysis of the current exam shows it to have a reliability of 0.90 (out of a possible 1.0 rating), which is considered very reliable in the testing industry.
Q: I went to NACVA's Business Valuation Training Center (TC), and some of the things on the proctored exam were not mentioned by the instructors. Why are we tested on things not taught in class?
A: The knowledge exam, usually referred to as the proctored exam, tests knowledge of the general field of valuation, the BOK, not just what might be discussed in a class on theory or practice. It is impossible for instructors to address every nuance of valuation theory and practice in 40 hours. That is why NACVA’s texts provide recommended reading and incorporate appendices a valuer needs to be familiar with. It takes both knowledge and the application of that knowledge to perform a business valuation.
Q: Where did NACVA’s Body of Knowledge (BOK) originally begin?
A: In 1997, NACVA HQ and TC instructor team (TCIT) (18 SMEs who taught NACVA’s five-day course) set for itself two goals: (1) to be consistent in what was taught in the TCs so that one instructor could step in for another without any knowledge loss, and (2) ensure that a participant who sat for NACVA courses could pass any competitor’s valuation certification exam. The TCIT came up with an outline of valuation knowledge which they would use in 1998. This outline began to evolve as it was used, modified, debated, checked and rechecked, and agreed upon. In addition to defining what the core concepts were that should be shared in the TCs, the TCIT began to note how much time they gave each topic. In early 2003, when the TCIT had an outline of concepts, complete with the time to be spent, the document/outline was given to the VCB for its input (and approval) with regard to certification. The VCB and its Exam and Grading Committee (EGC) began its debate, working with the TCIT outline, comparing it to the multiple choice/true-false proctored exam and case study used, and came up with the final outline for the BOK. The VCB then deliberated what percentage of the proctored exam should be on a given topic. In September 2004, the VCB agreed to use the resulting document as NACVA’s Body of Knowledge. The BOK has been updated about every five years ever since. All in all, over 70 different SMEs worked on the BOK.
Q: Why is there an Experiental Threshold requirement? Why isn’t the proctored exam sufficient by itself to qualify one's experience?
A: The proctored exam tests what the candidate knows about all the various aspects of valuation theory. This is often referred to as "book knowledge." What is missing from that concept is determining that the candidate can apply that knowledge to a real world situation. It takes both the knowledge and the application of that knowledge in the field of business valuations to be proficient.
Q: Why does NACVA use a standard Case Study for the Experiental Threshold requirement?
A: When all candidates perform a valuation using the same set of facts, NACVA’s peer review Grading Team can more easily judge whether or not the candidate can apply the book knowledge he or she has acquired. The same fact pattern also makes the case study more statistically valid, as one element of uncertainty is reduced, i.e., the degree of subjectivity in the peer review process. However, NACVA does allow experienced valuators to submit an actual valuation report prepared for a client. It is more work for our Grading Team, thus there is an additional fee to go this route.
Q: Will the exam/experience requirement change significantly in the near future?
A: The VCB has determined the next major review (which does not automatically mean change) of the proctored exam will be in 2022, and every five years thereafter.
Q: What is the process the VCB plans to use to change the proctored exam?
A: A psychometric option analysis is performed periodically, using historical data. This analysis determines what percentage of candidates chose each answer and where they fit into the overall score pattern. Such analysis identifies questions which are most often missed (perhaps too hard?) and which are always answered correctly (perhaps too easy?), and which questions appear to be confusing (equal responses to all answer choices). This information is used by the VCB SMEs to review each question, and to decide what should be done.
Q: SME—what is that?
A: SME stands for subject matter expert. There are several ways to qualify a SME. Earning a PhD is one way. Having earned an MBA, CPA, CFA, CVA, JD, or other credential/advanced university degree is another. When one adds a level of experience to the aforementioned credentials or licenses, credibility increases. NACVA has found, since its inception in the early 90s, that persons with five years or more experience in performing business valuations provided them the savvy to share working knowledge and applications of that knowledge with others. These individuals were initially sought out for advice and for assistance in the "tough" valuation issues. As an organization, NACVA began to hire these people to help others with less experience or even no experience. After time, NACVA’s teams (both the teaching side and testing side) determined that five or more years of experience was a common denominator that worked well for the organization. NACVA currently identifies its SMEs as credentialed practitioners with five or more years of active experience in valuing closely held businesses. "Active" equates to about 10–15 valuations per year. And today, many of these SMEs perform valuations (which includes litigation support) full-time. Many of them teach in their local universities and societies and are active in NACVA Chapters. These are the individuals who assist NACVA in keeping our programs top notch, our proctored exam at 0.90 reliability, our case study relevant, and help NACVA support a wide variety of ways.
Q: Who decides what is passing?
A: The VCB.
Q: What is passing?
A: To establish a passing score, the VCB uses a psychometric analysis based on expert judgements about the questions called a cut score study. The passing score is placed within three standard error of measurement (SEM) of the mean. The SEM allows the VCB a degree of latitude in setting (or fixing) its passing score somewhere within that range. The passing standard is maintained over time and across forms by a statistical procedure called equating. The Association performs a cut score analysis periodically (generally after a major update to the exam based on changes to the BOK) to determine and update the passing score.
Q: Why does NACVA charge me another fee when I want to know more specifically what and how I performed on the case study?
A: The fee is used to offset copy costs, shipping costs, phone costs, etc., to forward your case to a grader/mentor for peer review. The bulk of the fee, however, is to compensate the grader/mentor for his/her time spent with you.