Supervisors, Trainees, and USPAP Chapter 3 Supervisors, Trainees, and USPAP Supervising the Trainee Appraiser: National Regulations and Responsibilities (091014) See Page(s) xx-xx 1

Chapter 3: Supervisors, Trainees, and USPAP Chapter Objectives Specify the obligations of the ETHICS RULE and RECORD KEEPING RULE of USPAP and how they relate to supervisory appraisers and trainee appraisers. Describe the obligations of the COMPETENCY RULE and the SCOPE OF WORK RULE and how they relate to supervisory appraisers and trainee appraisers. Supervising the Trainee Appraiser: National Regulations and Responsibilities (091014) See Page(s) xx-xx 2

Applicable USPAP Rules Chapter 3: Supervisors, Trainees, and USPAP Applicable USPAP Rules The ETHICS RULE and the COMPETENCY RULE of USPAP (as well as the JURISDICTIONAL EXCEPTION RULE) are applicable to all appraisal practice. In other words, these rules are applicable any time one is acting as an appraiser, not just when an appraiser is performing an appraisal or appraisal review. The RECORD KEEPING RULE and the SCOPE OF WORK RULE of USPAP apply only when an appraiser is performing an appraisal or appraisal review. Supervising the Trainee Appraiser: National Regulations and Responsibilities (091014) See Page(s) xx-xx 3

Overview of the ETHICS RULE Chapter 3: Supervisors, Trainees, and USPAP Overview of the ETHICS RULE Promotes the idea that An appraiser must promote and preserve the public trust inherent in appraisal practice by observing the highest standards of professional ethics. The ETHICS RULE consists of three sections: Conduct Management Confidentiality Supervising the Trainee Appraiser: National Regulations and Responsibilities (091014) See Page(s) xx-xx 4

Conduct Section Covers a variety of obligations including: Chapter 3: Supervisors, Trainees, and USPAP Conduct Section Covers a variety of obligations including: General Conduct Development Issues Protected Classes Communication Issues USPAP FAQ 11 Supervising the Trainee Appraiser: National Regulations and Responsibilities (091014) See Page(s) xx-xx 5

Management Section of ETHICS RULE Chapter 3: Supervisors, Trainees, and USPAP Management Section of ETHICS RULE Addresses a variety of issues including: Disclosing fees, commissions, or things of value paid in connection with the procurement of an assignment. Unacceptable assignment conditions and compensation arrangements. Advertising/soliciting assignments in a false, misleading, or exaggerated manner. Affixing or authorizing the use of the appraiser’s signature to certify recognition and acceptance of that appraiser’s USPAP responsibilities in appraisal practice. Supervising the Trainee Appraiser: National Regulations and Responsibilities (091014) See Page(s) xx-xx 6

Confidentiality Section of ETHICS RULE Chapter 3: Supervisors, Trainees, and USPAP Confidentiality Section of ETHICS RULE Addresses in part Protection of the confidential nature of the appraiser-client relationship. Acting in good faith with the legitimate interests of the client relating to confidential information and in communicating assignment results. Obligation to be aware of and to comply with all confidentiality laws and regulations applicable in an assignment. Disclosure requirements and exceptions to the protection of confidential information and assignment results. Focuses on the appraiser-client relationship and the use of confidential information and assignment results. USPAP FAQ 59 USPAP FAQ 65 Supervising the Trainee Appraiser: National Regulations and Responsibilities (091014) See Page(s) xx-xx 7

Overview of the RECORD KEEPING RULE Chapter 3: Supervisors, Trainees, and USPAP Overview of the RECORD KEEPING RULE One of the specific obligations for supervisory appraisers is to ensure compliance with workfile obligations of USPAP. The RECORD KEEPING RULE provides numerous obligations for an appraiser regarding the appraiser’s workfile, with most emphasis placed on content requirements of the workfile, and workfile custody and retention. USPAP FAQ 74 USPAP FAQ 81 Supervising the Trainee Appraiser: National Regulations and Responsibilities (091014) See Page(s) xx-xx 8

Overview of the COMPETENCY RULE Chapter 3: Supervisors, Trainees, and USPAP Overview of the COMPETENCY RULE Components include but are not limited to: Having knowledge and experience to complete the assignment. Recognizing when an appraiser lacks competency. Disclosing the lack of knowledge or experience Understanding methods for obtaining competency The three sections of the RULE consist of: Being Competent – Requirements for competency. Acquiring Competency – Requirements if an appraiser is not competent at the onset but wishes to accept the assignment. Lack of Competency – Requirements of an appraiser who realizes he does not possess and cannot acquire competency to complete an assignment. USPAP FAQ 96 Supervising the Trainee Appraiser: National Regulations and Responsibilities (091014) See Page(s) xx-xx 9

Overview of the SCOPE OF WORK RULE Chapter 3: Supervisors, Trainees, and USPAP Overview of the SCOPE OF WORK RULE Addresses three primary obligations for appraisers in an appraisal or appraisal review assignment; each of these sections of the rule will be discussed in this lesson: Problem Identification Scope of Work Acceptability Disclosure Obligations When determining the appropriate scope of work to be applied in an assignment, a decision is made regarding the: Extent to which a property is identified. Extent of property inspection (tangible property). Type of data to be researched and to what extent. Type/extent of analysis applied in order to reach opinions/conclusions. USPAP FAQ 159 USPAP FAQ 175 Supervising the Trainee Appraiser: National Regulations and Responsibilities (091014) See Page(s) xx-xx 10

Key Term Review Appraiser’s Peers Assignment Results Chapter 3: Supervisors, Trainees, and USPAP Key Term Review Appraiser’s Peers Assignment Results Confidential Information Scope of Work Workfile Appraiser’s Peers Other appraisers who have expertise and competency in a similar type of assignment. *   Assignment Results An appraiser’s opinions and conclusions developed specific to an assignment. * Confidential Information Information that is either identified by the client as confidential when providing it to an appraiser and that is not available from any other source; or classified as confidential or private by applicable law or regulation.* Scope of Work The type and extent of research and analyses in an appraisal or appraisal review assignment.* Workfile Documentation necessary to support an appraiser’s analyses, opinions, and conclusions. * *USPAP 2014-2015 Edition Supervising the Trainee Appraiser: National Regulations and Responsibilities (091014) See Page(s) xx-xx 11

Chapter 3: Supervisors, Trainees, and USPAP Summary The ETHICS RULE sets forth foundational obligations when acting in the role of an appraiser and amplifies that an appraiser is required to always observe the highest standards of professional ethics. The Management section of the ETHICS RULE addresses, in part, disclosing fees, commissions, or things of value paid in connection with the procurement of an assignment, unacceptable assignment conditions and compensation arrangements, and advertising/soliciting assignments in a false or misleading/exaggerated manner. The focus of the Confidentiality section of the ETHICS RULE is on the appraiser-client relationship and the use of confidential information and assignment results. The RECORD KEEPING RULE provides numerous obligations for an appraiser regarding the appraiser’s workfile, with most emphasis placed on content requirements of the workfile, and workfile custody and retention. The three sections of the COMPETENCY RULE consist of (1) Being Competent , (2) Acquiring Competency, (3) Lack of Competency. Competency on the part of a supervisory appraiser or trainee appraiser is one of the most critical determination that must be made in the experience process. The SCOPE OF WORK RULE addresses three primary obligations: (1) Problem Identification, (2) Scope of Work Acceptability, and (3) Disclosure Obligations. Supervising the Trainee Appraiser: National Regulations and Responsibilities (091014) See Page(s) xx-xx 12

Chapter 3: Supervisors, Trainees, and USPAP Chapter 3 Quiz 1. Brad is acting as a supervisory appraiser for Tina, a trainee appraiser. Brad has told Tina that he keeps all of his workfiles for at least ten years, although, according to the RECORD KEEPING RULE, a workfile must be kept for a minimum of ________ years. three four five seven The answer is C. A workfile must be kept for at least five years after preparation or two years after final disposition of any judicial proceeding in which the appraiser provided testimony related to the assignment, whichever period expires last. Supervising the Trainee Appraiser: National Regulations and Responsibilities (091014) See Page(s) xx-xx 13

Chapter 3: Supervisors, Trainees, and USPAP Chapter 3 Quiz 2. Trainee appraiser Sarah is concerned that the scope of work she determined in an assignment may not be sufficient. According to the SCOPE OF WORK RULE, credibility of assignment results is always measured in context of the client’s goals. highest and best use. intended use. intended user. The answer is C. The credibility of assignment results is always measured in the context of the intended use. Supervising the Trainee Appraiser: National Regulations and Responsibilities (091014) See Page(s) xx-xx 14

Chapter 3: Supervisors, Trainees, and USPAP Chapter 3 Quiz 3. Jason’s supervisory appraiser is discussing the ETHICS RULE of USPAP with him and reviewing the prohibitions included in the rule. Which of these activities does the Conduct section of the ETHICS RULE prohibit? engaging in criminal conduct objective opinions in appraisal practice performing in another professional role valuation services outside of appraisal practice The answer is A. The Conduct section of the ETHICS RULE prohibits appraisers from engaging in criminal conduct. Supervising the Trainee Appraiser: National Regulations and Responsibilities (091014) See Page(s) xx-xx 15

Chapter 3: Supervisors, Trainees, and USPAP Chapter 3 Quiz 4. A supervisory appraiser is reviewing the elements of problem identification with her trainee in order to determine the scope of work in an assignment. Which is NOT a specific element of problem identification used in determining the scope of work? assignment conditions client and other intended users effective date of the opinions and conclusions reporting option to be used in the assignment The answer is D. The scope of work is only related to the development process. The reporting option to be used is based upon the intended use and intended users in an assignment, and is not part of the scope of work decision. Supervising the Trainee Appraiser: National Regulations and Responsibilities (091014) See Page(s) xx-xx 16

Chapter 3: Supervisors, Trainees, and USPAP Chapter 3 Quiz 5. Michael is a supervisory appraiser who has extensive experience in numerous areas of appraisal practice. However, there are certain valuation techniques and types of properties for which Michael has had no experience. Which would NOT be considered a competency factor in a particular assignment? analytical method appraiser’s credentials intended use laws and regulations The answer is B. Experience and knowledge regarding a particular analytical method, intended use, or laws and regulations affecting the assignment are some of the factors that must be considered in an appraiser’s competency. An appraiser’s credential is not referenced in the COMPETENCY RULE. Supervising the Trainee Appraiser: National Regulations and Responsibilities (091014) See Page(s) xx-xx 17

Chapter 3: Supervisors, Trainees, and USPAP Chapter 3 Quiz 6. Stephen, a supervisory appraiser, has accepted an appraisal review assignment, which he will also share with his trainee, Sandy. The assignment includes an oral report as the only means of communication. When must Stephen and Sandy initiate a workfile for an oral report? at the time of issuing the report before accepting an assignment prior to the issuance of the report within a reasonable period of time after the report The answer is C. A workfile must be in existence prior to the issuance of a written or oral report. Supervising the Trainee Appraiser: National Regulations and Responsibilities (091014) See Page(s) xx-xx 18

Chapter 3: Supervisors, Trainees, and USPAP Chapter 3 Quiz 7. The Management section of the ETHICS RULE states that an appraiser must disclose that he or she paid a fee or commission, or gave a thing of value in connection with the procurement of an assignment by including the disclosure in the certification only. workfile only. certification and transmittal letters. workfile and report conclusion section. The answer is C. Appraisers must disclose payments made in relation to procuring an assignment by disclosing that he or she paid a fee, or gave a thing of value in connection with the procurement of an assignment by including the disclosure in the certification and transmittal letters where conclusions are stated. Supervising the Trainee Appraiser: National Regulations and Responsibilities (091014) See Page(s) xx-xx 19

Chapter 3: Supervisors, Trainees, and USPAP Chapter 3 Quiz 8. According to the Acquiring Competency section of the COMPETENCY RULE, an appraiser who lacks competency may accept the assignment and does not need to disclose the lack of competency as long as the appraiser has taken steps to competently complete the assignment. may accept the assignment, as long as the lack of competency is disclosed to the client. may accept an assignment, as long as the lack of competency is documented in the report along with the steps taken to complete the assignment competently. may not accept the assignment. The answer is C. The Acquiring Competency section states that an incompetent appraiser must disclose the lack of competency to the client prior to accepting the assignment, take all necessary steps to complete the assignment, and describe the lack of competency in the report, including the steps taken to competently complete the assignment. Supervising the Trainee Appraiser: National Regulations and Responsibilities (091014) See Page(s) xx-xx 20

Chapter 3 Quiz 9. Advisory Opinion 29 states that Chapter 3: Supervisors, Trainees, and USPAP Chapter 3 Quiz 9. Advisory Opinion 29 states that an appraiser’s peer must have a focused area of expertise and competency specific to the designation. an appraiser’s peer must have a wide variety of expertise and competency to be designated. merely holding the same type or level of credential does not make one an appraiser’s peer. the type or level of credential is the sole deciding factor in the identification of an appraiser’s peer. The answer is C. Advisory Opinion 29 advises that an appraiser can have a focused area of expertise and competency or a wide variety of expertise and competency, and that merely holding the same type or level of credential does not make one an appraiser’s peer. = C Supervising the Trainee Appraiser: National Regulations and Responsibilities (091014) See Page(s) xx-xx 21