1. Supervisors, Trainees, and USPAP
Chapter 3
Supervisors, Trainees, and USPAP
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2. 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.
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3. 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.
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4. 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
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5. 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
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6. 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.
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7. 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
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8. 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
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9. 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
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10. 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
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11. 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 Edition
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12. 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.
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13. 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.
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14. 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.
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15. 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.
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16. 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.
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17. 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.
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18. 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.
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19. 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.
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20. 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.
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21. 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
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