Q & A Database
The GIPS Standards Q&A database contains questions and answers (Q&As) on various searchable topics that provide additional interpretation on an issue. Q&As are considered to be authoritative guidance and must be followed in order to claim compliance with the GIPS standards.
Content from prior Q&As was included in the GIPS Standards Handbook as much as possible and many Q&As were archived. Change the Status drop-down filter to "Archived" to see the archived Q&As.
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ArchivedEffective: 1 January, 2006 - 31 December, 2019Categories: Private EquitySource: Interpretive Guidance for Private Equity
How is fair value defined and how does this compare with accounting standards?
The concept of fair value used in the GIPS private equity provisions mirrors the fair value principles used in international accounting standards. Fair value is the amount at which an asset could be acquired or sold in a current transaction between willing parties in which parties each acted knowledgeably, prudently, and without compulsion. Fair value does not assume an intention or ability to sell at the date of valuation but is an estimate of the likely exchange price involving subjective judgments, which must be based on reasonable estimates of the company’s current and future performance. In sales of private company holdings, a buyer is likely to reflect in the price any restrictions applying to the asset, including the extent to which liquidity can be achieved in any subsequent resale.