There are two types of engagements as defined by the AICPA Statement on Standards for Valuation Services to estimate value – a valuation engagement and a calculation engagement. The valuation engagement requires more procedures than does the calculation engagement. The valuation engagement results in a conclusion of value. The calculation engagement results in a calculated value. The type of engagement is established in the understanding with the client.
a. Valuation engagement – A valuation analyst performs a valuation engagement when (1) the engagement calls for the valuation analyst to estimate the value of a subject interest and (2) the valuation analyst estimates the value and is free to apply the valuation approaches and methods he or she deems appropriate in the circumstances. The valuation analyst expresses the results of the valuation as a conclusion of value; the conclusion may be either a single amount or a range.
b. Calculation engagement – A valuation analyst performs a calculation engagement when (1) the valuation analyst and the client agree on the valuation approaches and methods the valuation analyst will use and the extent of procedures the valuation analyst will perform in the process of calculating the value of a subject interest (these procedures will be more limited than those of a valuation engagement) and (2) the valuation analyst calculates the value in compliance with the agreement. The valuation analyst expresses the results of these procedures as a calculated value. The calculated value is expressed as a range or as a single amount. The calculated engagement does not include all of the procedures required for a valuation engagement.
A calculation engagement is limited in scope and the user of this information must understand its limitations. The results reported by MPR should not be used for any other purpose because of the limited work performed. MPR cannot be liable or responsible for any decisions made by the parties, their advisers and attorney(s) based on the use of the results of a calculation engagement.