This business case is for inventories under Level 1 - where inputs are observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. Reserve calculation scope is limited to the exit price / bid-offer spread.
What is Valuation Control?
While the trading personnel are responsible for marking inventory positions daily. It is CFO team’s responsibility to ensure that the Balance Sheet inventories are correctly marked. On a daily basis, Product control performs P&L review and provides risk-based P&L explanatory. On monthly basis, independent Price Verification team (IPV) or Valuation control team performs and publishes results of price verification process.
This procedure aims at ensuring that the firm's inventory is marked at fair value. For certain positions, for which daily active markets do not exist, price verification may be done on less frequent basis however at least once per quarter.
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