A Practical Guide to Independent Pricing in Financial Reporting
Independent pricing plays a critical role in today’s financial reporting environment, particularly as audit scrutiny and regulatory expectations continue to increase. For audit and reporting teams, the goal isn’t simply to obtain a price - it’s to support valuations that are transparent, defensible, and aligned with applicable accounting standards.
Why Independence Matters
Relying solely on client-provided prices or internally generated valuations can introduce challenges during audits and reviews. Even when management’s pricing appears reasonable, auditors are required to assess whether valuations are independent, appropriately supported, and free from bias.
Independent pricing helps address this by:
Reducing reliance on management assumptions
Providing an objective reference point for audit testing
Supporting stronger documentation and review processes
When pricing is independent, audit teams can focus less on validating the source of the valuation and more on evaluating its appropriateness.
What Independent Pricing Looks Like in Practice
Effective independent pricing is more than a third-party number. It typically includes:
Clear identification of valuation methodologies
Documented inputs and assumptions
Reasonable ranges where applicable
Alignment with relevant standards such as ASC 820, GASB 72, and IFRS 13
This level of transparency allows auditors and reviewers to understand not just the outcome of the valuation, but how it was derived.
Reducing Audit Friction
Independent pricing can also reduce follow-up questions during audits. When valuations are supported by clear documentation and consistent methodologies, teams spend less time responding to additional requests and more time progressing through review cycles efficiently.
At Harvest, independence is a foundational principle. Prices and valuations are developed independently of client-provided inputs, with documentation designed to support audit and regulatory review—helping teams navigate complex reporting periods with greater confidence.
