Certified Valuation Analyst CVA Professional Standards and Ethics 3 — Questions and Answers
Question 1: Which premise of value assumes the business will continue operating into the foreseeable future?
- Going concern (Correct answer)
- Orderly liquidation
- Forced liquidation
- Assemblage of assets
Correct answer: Going concern
The going-concern premise assumes the business continues operating rather than being liquidated.
Question 2: A CVA must disclose in the report any restrictions on the scope of work that affect the conclusion. This requirement promotes:
- Transparency so users understand limitations on the analysis (Correct answer)
- Higher fees for the analyst
- Faster turnaround of the report
- Avoidance of peer review
Correct answer: Transparency so users understand limitations on the analysis
Disclosing scope limitations ensures report users understand how restrictions may affect the conclusion.
Question 3: Under the ethics standards, when may a CVA disclose confidential client information?
- When legally compelled or with client consent (Correct answer)
- Whenever a competitor requests it
- To market the analyst's other services
- Anytime after the engagement ends
Correct answer: When legally compelled or with client consent
Confidential information may only be disclosed with client consent or when legally required (e.g., subpoena).
Question 4: What is the standard of value most commonly used in estate and gift tax valuations?
- Fair market value (Correct answer)
- Investment value
- Intrinsic value
- Liquidation value
Correct answer: Fair market value
Fair market value is the IRS standard for estate and gift tax purposes.
Question 5: A CVA serving as an expert witness must maintain which posture even when retained by one party?
- Objective, independent, and unbiased opinion (Correct answer)
- Strong advocacy for the retaining party
- Silence on weaknesses in the case
- Loyalty to the retaining attorney above all
Correct answer: Objective, independent, and unbiased opinion
An expert witness must remain objective and unbiased regardless of which party retained them.
Question 6: Which of the following best describes 'fair value' as it differs from fair market value in many statutory contexts?
- It often excludes discounts for lack of control and marketability (Correct answer)
- It always equals liquidation value
- It is identical to investment value
- It requires a forced-sale assumption
Correct answer: It often excludes discounts for lack of control and marketability
Statutory fair value in dissenting-shareholder matters frequently excludes minority and marketability discounts.
Question 7: What must a CVA do if errors are discovered in a report already issued to a client?
- Take appropriate corrective action and notify affected users (Correct answer)
- Ignore them if the client is satisfied
- Wait until the next engagement
- Destroy the original report
Correct answer: Take appropriate corrective action and notify affected users
Discovered errors require corrective action and notification to users who relied on the report.
Certified Valuation Analyst CVA Professional Standards and Ethics 3
Which premise of value assumes the business will continue operating into the foreseeable future?