Definition
The committee is the governance layer between the people who produce marks and the figures that are reported. Its remit is to review the significant inputs to each valuation, scrutinise any override of a model output and the reason for it, and confirm that the evidence supports the mark — for Level 3 positions under IFRS 13 and ASC 820 this means examining the unobservable inputs, the calibration to origination, and the sensitivity of the mark to its assumptions. Effectiveness rests on independence and documentation: members positioned to challenge the deal team without conflict, a recorded rationale for material marks and overrides, and minutes that show the basis on which each valuation was approved. The committee approves the result; it does not re-run the model.
Why it matters in private credit valuation
- A mark is more defensible when an independent body has reviewed and approved it, so the committee’s scrutiny is part of what makes a Level 3 valuation stand up to an auditor.
- What the committee should review is specific: the inputs, any overrides and the evidence behind them — and the record of that review is itself part of the valuation’s audit trail.
Related
Glossary terms
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