Insufficient Evidence Provided by
Husband Causes Valuation Not to Meet
AICPA Standards
Yong Hugh v. Hyesun Hugh, et al.,
Court of Appeals of Virginia, Record
No. 1417-13-4 and Record No. 1438-
13-4 (June 3, 2014)
Hyesun Hugh filed an appeal with the
Court of Appeals of Virginia (“appeals
court”) regarding the Circuit Court
of Prince William County’s (“trial
court’s”) failure to recognize the
valuation of her husband Yong Hugh’s
business holdings among other
reasons.
Background
Hyesun filed for divorce in 2012
after 15 years of marriage. The
case highlights the valuation of her
husband’s business holdings, which
was complicated by the company
having regularly dissolved and later
restarted under a new business
name. Additionally, there were
major discrepancies between the
2010 financial statements and the
tax returns for the business such that
the income on the tax return was
double the amount on the financial
statements.
Hyesun hired a valuation expert to
appraise Yong’s business holdings,
however, Yong only made available
2010’s financial statements excluding
general ledgers, QuickBooks files,
and bank and credit card statements.
The valuation expert admitted that
due to the lack of data provided
by the husband, the valuation did
not meet the American Institute of
Certified Public Accountants (“AICPA”)
standards.
The trial court believed that this
should have prompted the valuation
expert “to interview management or
perform a site visit.” Hyesun’s hired
valuator defended his valuation as
reasonable. However, the trial court
ruled that there was no value to
Yong’s business holdings therefore
denying Hyesun a portion of the
business’ value as part of the divorce
settlement.
The Appeals Court’s Conclusion
The appeals court ruled that it was
possible to value the husband’s
business holdings citing the case of
Collins v. Collins in which “a business
that has gross income can be valued”
despite the questionable nature of
the business’ tax returns. As a result,
it remanded the case to the trial court
for “refusing to value and distribute
the parties’ business.”
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Valuation Vantage
Spring-Summer 2015
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