AlgoValue: Providing Valuable 409A Audit Support
As you all know, Audit Support is a critical part of any formal valuation workflow. At a minimum, Audit Support advises audit teams of a firm’s clients, regarding accounting issues that are often based on financial valuations.
Financial valuations are typically performed by an independent third party expert, such as a business valuation professional. The audit of a valuation project is a highly specialized process that requires the auditor to successfully interact with the owners of a project, as well as be knowledgeable about every aspect of a company’s processes, procedures, and records.
Two main challenges
The Audit Support process however, presents two main challenges for audit firms. First, many auditors struggle with the complex valuation work they encounter during the audit process. They’re often not equipped with the proper tools to examine the valuation, nor do they have experience in the proper procedural resolution process. This is especially true because of the fact that the valuation has been completed by a third party. The second challenge arises when auditors deliver the valuation work to the firm’s financial services department for review. This often requires many hours of review work, some of which are not billable.
AlgoValue’s online 409A Compliance Wizard
The IRC 409A valuation is the perfect example of a highly time consuming, complex valuation project within the Audit Support process. When a complex capital structure is present, the value of the company’s equity must be determined. That value is then allocated to preferred and common shareholders, a process commonly described as “waterfall analysis”.
AlgoValue’s online 409A/ASC 820 Compliance Wizard streamlines 409A valuations so that an auditor can review both waterfall analysis and the main parameters (i.e., volatility and risk free rate) used by the valuator. Using the AlgoValue solution, auditors can also download all necessary data for Excel review, and save it as part of its working papers.
With AlgoValue’s smart, affordable technology, auditors have the tools they need to review a business valuator’s work, and save up to 80% of their time in the process.