are a cornerstone of the investment management industry and represent a significant day-to-day responsibility for asset management. This is especially important for pooled investment vehicles (such as mutual funds, hedge funds, etc.) where the accurate valuation of the pool's assets forms the basis of investment transactions among existing, new, and departing investors. Inaccurate valuations expose investment management institutions to both financial and reputation risk. For example, in a high-profile case in the United Kingdom, British regulators in 1997 fined Morgan Grenfell Asset Management S3.3 million after the fund manager overstated the value of unlisted stocks in the firm's funds. Or, in 1998, a former manager of a Paine Webber bond fund settled Securities and Exchange Commission (SEC) charges that he inflated the fund's net asset value (NAV) by frequently valuing some holdings at prices much higher than those suggested by the fund's custodian. While certain markets have good price transparency (e.g., listed equities during trading hours), others do not (e.g., many fixed income and derivative instruments, and even equities markets at particular times1). Furthermore, even in transparent and liquid markets, unforeseen events such as market closures, trading halts, or other events can affect the ability to adequately price portfolios at fair valuations. For example, how should a manager value portfolio holdings in Taiwanese securities when the Taiwan stock exchange unexpectedly gets closed for days following a local earthquake? Or what is the fair value of a security that ceases trading due to a trading halt on the stock exchange ? This chapter focuses on the functions performed by an independent valuation oversight group that is increasingly a feature of a state-of-the-art control environment for an asset manager. The organization of the chapter is: II We suggest that a valuation oversight philosophy should be incorporated as a part of the risk management and control framework of an investment manager. !For example, the price transparency for Asian equities held in a U.S.-domiciled mutual fund to be priced at 4:00 p.m. Eastern time is not clear given that the last data point from liquid trading activity might be as "stale" as 11 to 15 hours.