New AICPA Accounting and Valuation Guide - Forthcoming

June 18, 2019

Valuation of Portfolio Company Investments of Venture Capital and Private Equity Funds and Other Investment Companies

In August or September of 2019, the AICPA expects to release the new Accounting and Valuation Guide Valuation of Portfolio Company Investments of Venture Capital and Private Equity Funds and Other Investment Companies. (The working draft of this Guide and 2 additional case studies were originally released for feedback in May 2018 and December 2018, respectively).

This guide will provide nonauthoritative guidance and illustrations for preparers of financial statements, independent auditors, and valuation specialists regarding the accounting for and valuation of portfolio company investments held by investment companies within the scope of FASB ASC 946, Financial Services—Investment Companies (including private equity funds, venture capital funds, hedge funds, and business development companies). This guide may also be useful for non-investment companies, such as corporate venture capital groups or pension funds, which make investments in similar types of portfolio companies and pursue similar strategies (however, the numerous and varied aspects of these non-investment entities were not considered or contemplated in the preparation of this guide.)

This guide will address many accounting and valuation issues that have emerged over time (such as unit of account, transaction costs, calibration, the impact of control and marketability, backtesting) to assist investment companies in addressing the challenges in estimating fair value of these investments. This guide will include 16 case studies that can be used to reason through real situations faced by investment fund managers, valuation specialists and auditors.

If you have any questions, please e-mail Yelena Mishkevich at yelena.mishkevich@aicpa-cima.com.