• Colin Doyle CFO

AICPA launches 'Valuation of Financial Instruments' credential

By Sean McCabe

The American Institute of CPAs launched a new credential and accompanying performance framework Monday that will address the "consistency, clarity and transparency of the valuation of financial instruments."

The Certified in the Valuation of Financial Instruments credential is now available to CPAs and finance professionals. The CVFI credential will require extensive education and experience requirements, including passing a new exam.

Financial instruments, including mortgage-backed securities, credit default swaps and complex bonds, have traditionally proved difficult to value. But with recent data from the Bank of International Settlements showing more than $594 trillion in over-the-counter derivatives in 2018 alone, a standardized process for reporting the valuation of financial instruments is now seen as a necessity.

“Complex financial instruments have become more prevalent on balance sheets," stated Susan Coffey, executive vice president for public practice at the Association of International Certified Professional Accountants. "The marketplace has a clear need for a more consistent and transparent valuation approach. The CVFI credential and accompanying performance framework creates a consistent and transparent process for professionals who perform fair value measurements on financial instruments. This increased clarity will help build investor and regulatory confidence as financial instruments continue to appear on company financial statements.”

The CVFI credential was developed with guidance from the Financial Instruments Performance Framework, which relies on four principles: independence, objectivity, integrity and consistency. New CVFI credential holders will need to comply with the framework to "ensure confidence in the consistency and transparency of their work," according to the AICPA.

To obtain the CVFI credential, candidates must complete extensive education courses covering the CVFI Body of Knowledge, pass an exam based on the Financial Instruments Performance Framework and the Body of Knowledge, and hold more than 3,000 hours of experience related to fair value estimates for financial instruments in the five years preceding their application.

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