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| Testing, Validating, and Supporting Company Specific Risk (1429Q) |
Course CPE: 2 hour(s)
Field(s) of Study: Accounting–2 hrs;
Program Level: Intermediate
Prerequisites: Previous training or research on subject matter being taught. Such persons are often at a mid-level within the organization, with operational and/or supervisory responsibilities.
Advanced Preparation: None
Delivery Method: QAS Self-Study
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Item
Number: 20BV1210TVS
Shipping Weight: 0lbs. 0oz. |
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$147.00 |
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Recording Date: December 10, 2020
Presenter: Lari Masten
Program Description:
In this session we will dive into the subject of the elusive unsystematic risk found in businesses. This risk is often called Company Specific Risk by valuation analysts and is typically incorporated into valuation analysis by way of a premium added to the cost of capital – the Company Specific Risk Premium (CSRP).
There has been a flurry of interest in CSRP recently, so much so, that the Appraisal Foundation’s Board of Trustees has put together a Working Group through the Business Valuation Resource Panel to prepare a voluntary guidance white paper on the subject, as it lacks uniformity in practice. The Working Group’s primary focus will be CSRP applicable in Fair Value for reporting compliance purposes, and whether the valuation specialist should adjust the discount rate, the PFI, or both to account for CSRP.
Solving a problem without empirical data is a challenge, and for CSRP, there is no gold standard. During this fast-paced session, we will highlight ways to identify if such a risk exists in your subject company, and if there is such a risk, how you can quantify and validate the risk adjustment. We will focus on the risk rate and will include discussion of the income and market approaches.
After completing this course, attendees will be able to:
- Differentiate between systematic and unsystematic risk in their analysis
- Assess whether or not the business and financial risk of a subject company is properly accounted for in their cost of capital or in their cash flows models
- Quantify the impact to value that their CSRP has on their conclusion of value
- Reconcile the difference between methodologies applied
For more information regarding refund or concerns, please contact our offices at (800) 677-2009.
The Consultants’ Training Institute (CTI) is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its website: www.nasbaregistry.org.
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