How do we determine value and what prevalent quantificational routines are in place (Fair Value) ? The attached document provides an introduction to a complicated subject area.

1. Fair Value - Why it is important

2. Approach & Methodology
FAIR VALUE Copyright © 2017 Beide Forvaltning A/S
What it all comes down to .
Increasing focus on «accurate information» when
communicating financial statements has become a vital part of
overall corporate governance and financial guidance in
general. To ensure the right processes are in place we
recommend a structured approch vetted in policies and the risk
charter.
The process of determining fair value
To ensure that strategic decisions, tactical dispositions and M&A
transactions are performed and reported in line with stakeholder
expectations, we recommend the following steps
A. Identification of valuation principals (by duration)
B. Methodology (quantificational proficiency)
C. Vetting of approach
The term «fair value» is a structured best attempt to come up with
a market value of assets / liabilities, transactions, and derivatives
given «observability» of markets. Fair value principals are
governed under FAS157 / IFRS13 and divided into 3 levels dependt
on underlying «observability and liquidity» of markets».

3. Identification – Valuation principles
FAIR VALUE Copyright © 2017 Beide Forvaltning A/S
Determining how to quantify .
Matching cash flow characteristics of holdings with
observability of markets / transactions represents an
important matrix that periodically should be updated and
discussed with auditors to ensure that there is an overall
robust and relevant approach to balance sheet and income
statement valuations.
Identification process
The identification process itself consists of the following steps
designed to ensure stakeholder buy-in and acceptance;
A. Cash flow mapping. Categorize assets/liabilities/transactions and
derivatives by asset codes and vertecies (using constant maturities
or months / structured periods).
B. Market observability by asset code and nature of holdings
following GAAP/IFRS fair value rules.
C. Mapping of quantificational methods addressing linear / non-
linear characteristics based on what is described in A & B.
Prevalent use of quantificational methods are important for many
companies due to stakeholder expectations, investor and market
guidance and transparency of M&A activity. Addressing the process
for valuation principles (quantificational methods) is therefore
important to ensure everyone understands what is in place.

4. Methodology
FAIR VALUE Copyright © 2017 Beide Forvaltning A/S
Quality of quantificational approach
Establishing a quantification protocol will address what
methodology is in place, processes established and create
a document that can be used to create a structured, and
relevant process to be communicated with stakeholders.
Quantificational protocol
By establishing the protocol, organizations can «walk through»
valuation principles for asset codes (fixed income, FX, Commodity
and Equity) following accounting standards focusing on the
following;
1. Level 1 – Liquid markets. Processes and valuation models used to
provide value from transparant markets.
2. Level 2 - Readibly available - Processes and valuation models used
to provide value from 3rd party transaction or readily available
quotes.
3. Level 3 – Model used to provide valuations of low liquidty
assest/liabilities where
Prevalent use of quantificational methods, can be a challenge for
many organizations. In order to avoid surprises we suggested that a
«quantificational protocol» is established outlining the methods used
for addressing valuation principles.

5. Vetting of Approach
FAIR VALUE Copyright © 2017 Beide Forvaltning A/S
What is vetting? .
Vetting of overall processes is «good governance» and will
address elements important in creating internal and
external expectancy for how financials are identified,
monitored and managed.
Financial guidance
Disclosure of income statement, balance sheet and cash flow
statement variables require that structured processes are in place
to address principles for guidance. By vetting approach to the
overall fair value determination, organization can improve financial
guidance by;
A. Clearly communciate what processes are in place.
B. Ownership of overall processes (internal, board)
C. Strategy for how to communciate expectancy
Vetting refers to how an organization develops assurance for what
quantificational routines are in place, how prevalent they are, and
to what extent that are known to internal and external
stakeholders. Vetting has become more important in recent years
due to increasing scutiny of regulators and stakeholders.

6. FAIR VALUE - PACKAGES
T Copyright © 2017 Beide Forvaltning A/S
Product Description Prices
Cashflow
mapping
Assist an organization and stakeholders in
identifying and addressing how linear and non-
linear cashflows should be mapped to represent
prevalent quantication.
Hourly price based on an
evaluation of how many hours it
will take to perform all or some of
activities listed
Process &
quantificational
protocol
Establish an overall recurring process for
addressing how assets/liabiliies/transactions and
derivatives should be valued and documented
to meet stakeholder expectancey and overall
financial governance.
Hourly price based on an
evaluation of how many hours it
will take to perform all or some of
activities listed
Periodically reviewing and communicating fair value of holdings will ensure that strategic dispositions, tactical
allocation, and financial guidance are line with expectations.
FAIR VALUE