When the revised Valuation Practice Standards take effect on January 1, 2026, one of the biggest shifts will be in how Members approach Scope of Work. The updated Practice Standard No. 120 (PS 120) lays out new, clearer requirements designed to strengthen credibility, comparability, and accountability across all valuation engagements. 

What’s New 

  1. Written Engagement Agreements 
  • Every valuation engagement must begin with a written agreement that clearly sets out what is included in the services to be provided. This requirement is aligned with IVS.  
  • Any significant changes to the scope of work during the engagement must also be documented and agreed to in writing. 
  1. Consideration of Prior or Current Valuations  
  • Members must obtain and consider relevant prior valuations or indicators of value, where available. 
  • This includes valuations by other valuation professionals or analysts, market trading prices, equity transaction details, or formal offers involving the subject interest, etc. 
  1. Mandatory Quality Review Process 
  • A quality review must be applied to every valuation. Each Member’s process may vary, but should be based on the following principles and best practices: 
  1. Professional skepticism and review & challenge of key judgments. 
  2. Peer review by, if possible, another CBV with sufficient appropriate expertise, where appropriate, and/or other internal quality review processes. 
  3. Documentation of the process in working papers (as required under Practice Standard No. 130). 
  1. Assess Reliability of External Sources and Tools 

Why the Changes are Important 

  • Clarity with clients: A well-drafted engagement agreement ensures alignment on scope, purpose, and deliverables. 
  • Consistency and transparency: Considering past valuations provides context and signals diligence to regulators, auditors, and courts. 
  • Accountability: A formal quality review process enhances internal standards and reinforces the defensibility of CBV work. 

Suggested Actions for Members 

  • Update procedures: Establish a clear process where the engagement agreement is finalized as soon as the required information is obtained, the signed client engagement agreement and any instructions are retained on file (see also PS 130), and any significant changes during the engagement are documented in writing.  
  • Enhance disclosure requests: Ensure client information disclosure request lists include prior or current valuations, as well as other relevant indicators of value (such as formal offers, equity transaction details, market trading prices).  
  • Support professional judgment: Establish consistent internal rules or guidance on when to use a self-review checklist versus when to engage an independent or peer reviewer.   

By tightening these foundational steps, PS 120 ensures that every Valuation Conclusion begins with a clear framework and ends with a more reliable, supportable result. 

Further resources: 

This article highlights key elements of PS 120, but it is not a substitute for the standard itself. As Members, you are responsible for reading the new Practice Standards in full and ensuring you understand their requirements. All references to Members in this article apply equally to Registered Students of CBV Institute. 

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