Once again the planets have aligned, and I find myself in agreement with Messrs. Miller and Bahnson in their column “Comparability, schmomparability,” (May 19-June 1, 2008, page 15).In discussing the Financial Accounting Standards Board’s desire for “comparability” in accounting, they make the point that it would be more important for preparers and auditors to use professional judgment than follow rigid rules. More transparency, rather than simply following rules, will provide information that is not only more relevant, but also more reliable.

I come to the same conclusion, albeit by a far different route. As a professional valuation specialist with 40 years of experience, I have valued literally over $100 billion of assets.

One of the three major approaches to valuation — and there are only three — is the Market Comparable Approach. The other two are the Income Approach and the Cost Approach. In valuing businesses, we almost always use the Market Comparable Approach, and this is supported by FASB because the only Level 1 asset values come from the market. While valuation specialists do not necessarily give primacy to the Market Comparable Approach over the other two, it is true that if there is a good arm’s-length market transaction, we will use it.

Our problem comes about because, in the real world, there are never any truly comparable businesses. Leaving financial instruments aside, we have never found two companies that can be considered truly comparable. There are always different managements, different customers, different products and different services. Whenever I am valuing a service business with many competitors providing more or less “similar” services (e.g., brokers or wholesale distributors), the first thing that executives and owners tell me is, “We are different because ... .”

True comparability among companies is a chimera. For FASB to try and achieve comparability through its promulgation of GAAP is simply wishful thinking. While Messrs. Miller and Bahnson did not come out and formally suggest that FASB decrease the importance of comparability in its Statements of Financial Accounting Concepts, this certainly is worthy of very serious study.

Alfred M. King

Vice Chairman

Marshall & Stevens

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