We prepare impairment assessments that withstand audit scrutiny, with clearly supported forecasts, discount rates and sensitivity analysis.
Situations
When UAE clients ask for this valuation
- 1Annual goodwill impairment testing is due.
- 2Trading has deteriorated, market conditions have changed or a business is underperforming its acquisition case.
- 3Your auditor has challenged management's existing impairment model.
Who asks us
Typical clients
- CFOs and financial controllers
- Group finance teams
- Audit committees
What we value
The subject of the valuation
Cash-generating units and groups of units to which goodwill is allocated, and individual assets where relevant.
Our method
How we reach the figure
We review the identification of cash-generating units and the allocation of goodwill, build or review discounted cash flow models on approved budgets, and derive discount rates appropriate to each unit's risk and currency. Fair value less costs of disposal is considered where it may be higher.
| Income | Value in use from discounted cash flows | Usual starting point |
|---|---|---|
| Market | Fair value less costs of disposal | Cross-check |
| Check | Market capitalisation and implied multiples | Where relevant |
Value drivers
Points that move the value
- Forecasts
- Whether budgets are reasonable and consistent with past performance.
- Discount rates
- Pre-tax rates reflecting the specific risks of each unit.
- Terminal growth
- Long-term growth assumptions for the markets the unit serves.
- Sensitivity
- How much assumptions must change before impairment arises.
Documents
What we will ask you for
- Budgets and long-range plans
- Carrying amounts by unit
- Prior impairment models and audit findings
The full list is tailored to your company once the scope is agreed.
Report, timing & fees
What you receive, and when
An impairment report with supporting schedules, discount rate workings and sensitivity disclosures.
Management is responsible for the financial statements and the assumptions adopted in them; the auditor forms its own view. Our valuation supports management's assessment and is prepared so the auditor can review it.
Timing
Planned before audit fieldwork, typically three to five weeks.
Fees
Quoted in writing; recurring annual tests can be scoped on a standing basis.
What affects the feeCompare report levels on our reports and deliverables page.
Questions
Questions clients ask about this service
- Can you review our own impairment model?
- Yes. We can review management's model and assumptions instead of building one from scratch.