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Deloitte Fair Valuation Survey Focuses on Innovation, Oversight of Third Parties

Deloitte’s sixteenth annual Fair Valuation Pricing Survey took a deep dive into innovation and how technology will shape the future of valuation. Deloitte found a small number of its survey participants (11 percent) reported that their fund groups have begun to use data analytics, offshoring, and/or robotics process automation to improve the efficiency, costs, and effectiveness of the valuation process in the last year; 22 percent are exploring these ideas, and 28 percent had incorporated robotics (such as having programs perform rules-based tasks) into their valuation process. Deloitte suggested that the pace of automating the valuation process remains relatively slow yet “the growth in available ‘use cases’ might eventually lead to more established practices.” The survey also focused on the risks and challenges of innovation in the valuation arena. Deloitte found that 64 percent of survey participants felt dependence on third parties was a risk; 28 percent identified the loss of expertise in the valuation function; 24 percent noted that the technology was not tested frequently enough; and 20 percent noted the inability to properly define accountability. The report also discussed board oversight of third parties and the evolving area of overseeing “fourth parties” that provide information or services to third-party service providers. With respect to reporting, Deloitte found that boards are continuing to see summarized data and analysis reports in both dashboard and non-dashboard formats. Seventy-five percent of participants indicated that the board receives a memo highlighting key valuation matters/ occurrences/statistics over the period. Forty-four percent indicated that the board receives summary data and analysis in a dashboard format, and forty-four percent indicated that the board receives summary data and analysis in a non-dashboard format.