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Valtech Demonstrated How Certified Public Accountants in Valuation Firm Can Enhance Reliability of ECL and Valuation

HONG KONG, July 3, 2023 /PRNewswire/ -- Valtech Valuation ("Valtech"), a Hong Kong-based valuation firm, has recognised and demonstrated an increasingly pivotal role played by Certified Public Accountants ("CPAs") in ensuring full compliance with relevant statutory standards when preparing and reviewing expected credit loss ("ECL") assessments and other valuations.

In April 2023, the Hong Kong Institute of Certified Public Accountants ("HKICPA") organized a discussion forum addressing common deficiencies in valuation-related audits, with ECL being recognised as a significant area of concern. CPA Representatives from Valtech have attended the forum and shared the latest insights to Valtech's clients, auditors and business partners.

"Drawing from our experience, prevalent issues in ECL assessments include reliance on outdated, insufficient, or irrelevant data without proper calibration, inadequate consideration of risk factors, and insufficient documentation, leading to a lack of transparency in the ECL estimation process," said Max Tsang, the Director of Valtech. "We have positioned ourselves in the forefront of the latest developments in statutory standards and seasonal updates, ensuring strict adherence to the most current guidance and sharing the latest interpretations to CPA practitioners," he added.

The valuation team of Valtech is supported by a strong pool of experienced talents, comprising highly qualified professionals holding certifications such as Chartered Financial Analysts ("CFA"), Financial Risk Managers ("FRM"), and CPAs. By fostering effective communication and collaboration with audit teams, Valtech enhances the overall quality and reliability of assessments by evaluating the reasonableness and appropriateness of ECL estimates, methodologies, and assumptions.

Furthermore, Hong Kong Exchanges and Clearing Limited ("HKEX") has exhibited heightened scrutiny concerning ECL. There has been an increase in inquiries from HKEX regarding detailed valuations, relevant assumptions, and the basis for ECL assessments for both listed companies and those undergoing initial public offerings ("IPOs").

The director of Valtech, Marvin Wong believes that Valtech's CPAs are well-equipped to assist companies in selecting and implementing appropriate measurement methods for ECL assessments in line with the guidance provided by the International Financial Reporting Standards. "Our expertise lies in assessing elements such as the probability of default, loss given default, and exposure at default, ensuring their adequate representation in ECL assessments. This meticulous approach yields more accurate measurements and recognition in ECL assessments, effectively addressing the concerns of regulatory authorities on behalf of our clients," he added.

Internationally, ECL is important especially along with the interest hike in major economies. It affects the financial assets of not only banks but also other general corporates. Valtech has assisted over 100 clients to build ECL models following applicable accounting standards such as ASC 326 or IFRS 9, use reliable data sources, incorporate forward-looking information, regularly update ECL estimates, and maintain proper documentation of the estimation process.

Valtech, headquartered in Hong Kong, is actively seeking aspiring CPAs in Singapore to extend its support to local clients and meet the growing demand for valuation and ECL evaluation services, particularly in the context of IPOs in Hong Kong, Singapore, and the United States.

About Valtech Valuation

Valtech Valuation is a professional valuation firm accredited with ISO-9001 in valuation advisory services. The firm is renowned for its expertise in advanced valuation techniques, customized valuation models, data-driven insights, and adherence to compliance and reporting standards. With a solid track record in valuation advisory for listed companies, private equity, fund managers, and financial institutions, Valtech Valuation is well-positioned to serve the needs of funds and family offices.

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