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Borrowing from Accountancy.

About This Column

Accountants, like appraisers, engage in professional practices that rely on accuracy, integrity, and impartiality. TheT American Institute of Certified Public Accountants (AICPA), a national professional association for certified public accountants, produces a number of publications offering advice to CPAs. This edition of Resource Center looks at AlCPA's main resource, the Journal of Accountancy, and identifies articles related to professionalism, fraud, technol ogy, and firm management that appraisers will find helpful in their own professional practices.


What does accountancy and the world of certified public accountants (CPAs) have of interest to real estate valuers? Plenty. Of course, there are differences in our work, but there are a number of similarities in the professions. It often pays to see what is happening in other professions, to get information and ideas from others.

The Journal of Accountancy is a publication of the American Institute of Certified Public Accountants (AICPA). It is easily accessible, with a homepage ( that discusses the latest news and developments, and a library ( /issues.html) with an archive of issues from 1996 to today. (1)

Below are some recent Journal of Accountancy articles that offer ideas and information that may be applied to appraisal and used by consultants and practitioners in their practices. Some pieces are helpful for technical information, some for personal benefit, and some for firm management.

Articles Related to Professionalism

The Journal of Accountancy publishes articles related to professionalism within this area of specialized expertise. The following describes several articles with advice that may be of interest to professional appraisers.

"The Psychology Behind Good Judgment" (2) by

John Lauck, CPA, PhD, provides insight and advice in the matters of objective analysis and decision-making. Like CPAs and other professionals, independent valuers face the challenge of non-biased, objective decision-making, so this article has some pertinent observations. Lauck notes, "Academic research in both psychology and accounting reveals numerous pitfalls in the human decision-making process that can negatively affect everything" related to professionals' work. Valuers may find that the article's cautionary advice has application in their appraising, valuation, or market studies. The article's author observes that professionals who strive for objectivity and unbiased conclusions "can be susceptible to the effects of directional goals, including those that we unintentionally inherit from superiors or clients." He describes other problems in objective decision-making, including the halo effect, ego depletion, randomness and patterns, and regression to the mean. (3)

The "halo effect" covers the phenomenon of professionals (including appraisers and analysts) being subconsciously influenced by their initial like or dislike of the client or superior; the opinions and position of a superior, coworker, or the client, and the biases of others. Professionals, like others, are influenced by their "tribe," their people, and their environment--either knowingly or unknowingly.

The discussion of "ego depletion" addresses how, psychologically speaking, a professional's mental resources can vary throughout the day or week, and how "everyday decision-making depletes finite self-restraint resources." The article describes how professionals "who exhibit higher levels of professional skepticism" ironically are "more susceptible to the effects of ego depletion ... this is thought to be the case because more skeptical auditors [and valuers] engage in more complex thinking ... which more quickly depletes their decision-making resources."

Concerning "randomness and patterns," the Lauck says, "People tend to be poor intuitive statisticians and are not very adept at distinguishing patterns from random events ... we tend to see patterns in data when none actually exist." (4) This is of consequence to Appraisal Journal readers because finding patterns in data, whether in trends or relationships, is crucial for appraisers, valuers, and real estate market analysts.

The discussion of "regression to the mean" looks at the tendency for performance to revert to the mean of the past; that is, above-average performance is likely to become lower and below-average performance is likely to become higher. Absent information indicating amounts to the contrary, evaluating a body of data on average amounts, outcomes, or performance provides a better picture than pure opinion of likely amounts with vague or no basis. (5) The article concludes with a number of good references to resources on the topic, and a valuable section on "how to use psychology to your advantage."

"I'm Not Biased, Am I?" (6) by Rebecca Fay, CPA, PhD, and Norma R. Montague, PhD, offers another important and interesting discussion of the topic of professional neutrality. It is hard, if not impossible, to overemphasize the significance of the content of this article for most Appraisal Journal readers, valuation professionals, and market analysts. This important article addresses types of bias and the decision-making process. It addresses heuristic decision-making. Heuristics are mental shortcuts, using feedback to allow people to make decisions quickly and efficiently--but problems arise when people rely on these shortcuts unwittingly or when the shortcuts lead individuals astray in their decisions and decision-making.

This article also delves into problems arising from availability bias, anchoring, overconfidence, confirmation bias, rush-to-solve bias, and other topics affecting decision-making by would-be objective professionals. In a nutshell, the authors point out decisions can be, or are, influenced by:

1. relying on information that is most readily accessible (availability);

2. focusing on a preliminary amount and making an adjustment (anchoring and adjustment);

3. overestimating abilities (overconfidence);

4. making interpretations that support preexisting beliefs (confirmation); and

5. failing to consider all available data (rush to solve).

I highly recommend this article; it will stimulate and influence your thinking.

"Lease Accounting Laggards Face Serious Risks," (7) by Ken Tysiac, addresses a relatively recent change in Financial Accounting Standards Board (FASB) standards (8) rules. This article is primarily for financial reporting but--significant for valuers--points out some items that may be in leases and of importance when analyzing subject or comparable property leases. These include, related parties, embedded leases, taxes, lease renewals, discount rates, debt ratios, below-market rent leases, variable payments, variations from a standard lease model, and such. (9)

"How to Audit Fair Value Measurements," (10) by

Maria L. Murphy, CPA, and Mark O. Smith, CPA, JD, is perhaps not of direct use to most Appraisal Journal readers, but it does provide some insight as to other professions' views on, and types of, "value." As the authors state, "The use of FVM [fair market value] in financial reporting has been increasing ... because of the many types of valuations performed and the diverse background of people doing valuation work, the quality of this work may vary ... this has not gone unnoticed by the regulators--especially when the work does not meet auditing and disclosure standards."

Articles Related to Fraud

Journal of Accountancy articles often discuss fraud and how to identify it. The following describes some important contributions with advice that is of interest to professional appraisers.

"Round Numbers: A Fingerprint of Fraud," (11) by Mark J. Nigrini, PhD, points out three types of fraud schemes:

1. financial statement fraud, which is of interest to appraisers who sometimes deal with operating statements in analyzing income and expenses in arriving at net operating income for capitalization;

2. occupational fraud; and

3. bribery.

Although appraisers have an obvious interest in the first category of fraud, they will find the others of interest as well. Appraisers and market analysts need to be alert to fraud. Appraisers have been advised to look out for fraud possibilities in transactions they analyze, mortgage loan appraisals, syndication-related appraisals, and other areas. The Nigrini article explains how round numbers in large data sets should raise concerns about possible fraud; it looks at "a fingerprint of fraudulent numbers that might seem obvious but is often overlooked: Fraudulent numbers are frequently round numbers." The author includes information on the use of Excel in the fraud detection effort.

"How the Evolution of Language Affects Fraud Risk," (12) by D. Kip Holderness Jr., CPA, PhD, et al., is another interesting Journal of Accountancy article about fraud. This piece comments on changing words and word meanings, business-speak, and slang as well as changes in communication methods, and the potential for miscommunication and misunderstandings. The implications for appraisers and real estate analysts in dealing with clients, and finding and confirming data, should be obvious. As the authors point out (addressing primarily an account and auditor readership):
   One linguistic trend in recent years involves the shortening
   of words and the use of more acronyms and other
   abbreviations, likely stemming at least partially from the
   collective increase in text messages, tweets, and short
   comments on various social media platforms. These communication
   channels lend themselves to quick, abbreviated
   messages. As people become more comfortable
   with these methods, the resulting social and technological
   communication styles spill over into other communications--including
   those in the professional context.

   Another dramatic change that affects the ability to
   detect fraud is the move to electronic channels as the
   dominant modes of business communication. The shift
   to emails, instant messages, and app-based communications
   has corresponded with fewer in-person conversations.
   Even the methods used for formal interviews
   have broadened. Interviews are increasingly conducted
   via video calls and apps or over the phone, especially
   when geographical or logistical barriers make it difficult
   to meet in person.

   [Many people] are less experienced and even more
   uncomfortable communicating face-to-face or voiceto-voice
   than in the past. This can present huge challenges
   ... especially when trying to discern the veracity
   of the information they're being given. As new generations
   enter the workforce, this evolution becomes even
   more pronounced. The youngest workers today have
   been raised using digital communications as the norm,
   so they might not even be aware of this shift or understand
   its potential impact. Thus, auditors who are more
   comfortable generally with electronic communications
   might default to that mode when seeking information
   ... Doing so, however, can result in missing valuable
   nonverbal clues in other individuals' speed, tone, and
   inflection, as well as losing opportunities to ask immediate
   follow-up questions, as was illustrated in the
   introduction to this article. Further, even many individuals
   who are comfortable with face-to-face interaction
   have adapted to "quick hit" communication experiences,
   so longer, formal conversations can be difficult
   or undesirable.

Critical communication includes non-verbal messages that may be in emails, texts, or instant messaging, (13) including emojis. As the authors comment, the use of emojis in business and legal cases can have important implications:
   In some situations, emojis might be used to indicate
   intent, such as whether someone agreed to enter into a
   contract. However, the legal issues related to these non
   verbal messages are not only evolving but also potentially
   nebulous. For example, if one individual asks
   another to collude in a fraud scheme, and the second
   person responds with a smiley-face emoji, is that considered
   agreement? The person analyzing the message--whether
   an investigator, a judge, or a juror--must
   interpret both the sender's and receiver's intention
   with, and perception of, these messages.

The authors make several recommendations that apply to appraisers as well as accountants and auditors; here are just two:

* Principals and staff should be encouraged to have in-person conversations, face-to-face or by phone, especially when seeking important or potentially sensitive information from clients or others.

* Principals and staff need to be proactive, taking steps to keep up with language and communication changes. "The goal is to correctly understand--and use--the wording the interviewee uses to establish rapport and maintain the flow of information." If you, or a staff member asks a question and receives an answer that not clear, the most common mistake is to "... continue the interview without knowing what the other person is saying or assuming he or she understands what is being communicated. If the interviewee uses an unfamiliar word, the auditor should ask for clarification, rather than assuming its meaning or skipping over the response."

The "paper trail" and documentation in the file is still crucial, even as face-to-face interviewing and interaction is important as stressed in this article. The paper trail may be digital/electronic, or actual hardcopy or paper. This is important for compliance with the Uniform Standards of Professional Appraisal Practice, best practices, and liability safeguards.

For more from the Journal of Accountancy on fraud situations, take a look at these articles:

* "What's Your Fraud IQ?" (November 1, 2018,

* "How Cybercriminals Prey on Victims of Natural Disasters" (September 14, 2018,

* "How to Avoid Becoming a Scam Victim" (September 1, 2018,

Articles Related to Technology and the Digital World

The Journal of Accountancy also publishes articles related to technology and the digital world. The following describes several that are of special interest to appraisers.

"How to Boost Excel Efficiency with Power Query," (14) by Arthur F. Rothberg, CPA, CGMA, JD, provides a hands-on look at one of the powerful Excel tools. It relates to an example using data in QuickBooks, but the tool is potentially useful for real estate valuers and analysts as well as accountants because it involves handling database information. This article builds on a prior article "Data Mining Your General Ledger with Excel," (15) which presents a step-by-step process to extract data that can be readily analyzed through the use of Excel's PivotTables. (16)

"Real Talk about Artificial Intelligence and Blockchain," by Jeff Drew, and "What Is Blockchain?," (17) by Lou Carlozo provide insights about these topics in the news. When reading the articles, just substitute "appraiser" or "analyst" for "CPA"; there are some implications for online data, interacting with it, and other points for professionals in addition to CPAs and their work.

"Paving the Way to a New Digital World," (18) is the report of a panel discussion on trends in technology. Here you will find parallels with appraising and appraisal firms and the impact of coming technology. Points and observations mentioned by one panelist include "I am most excited about ... the small firms that are going to start collaborating with each other, creating small networks where they can share a niche expertise with each other and call on each other"; "[Work] will become data driven, and the use of data analytics and artificial intelligence will change how [we work]"; and commenting on blockchain, one panelist observed,
   [Blockchain is] really attractive for use because it was
   transparent, resilient, immutable--all without a third
   party. It ... uses cryptography to be transparent. It uses
   public/private keys to allow access to specific data by
   specific people who have those proper keys. It's resilient
   by distributing a copy of the ledger to each computer
   on the network. It's immutable by using what's called
   hashing algorithms to mathematically link each of those
   blocks together and to prevent them from being
   changed once they are on the chain. And it does this all
   without a third party.... that was the beginning. Block-chain
   has quickly evolved. We have got new ledgers
   that have been developed. We have new tools that
   allow us to build applications that interact with these
   different ledgers and write a variety of different data to
   these ledgers. So, it's much more than a database for
   just transactions. It's a new way to store and share and
   really search information. If you think of the internet as
   a network of information, blockchain is really a network
   of value or a network of trust.

Another comment by a panelist, with important parallels to appraising and appraisers, related to advancing technological tools and the future:
   [In] the three- to five-year range are two other issues.
   One Is the expert use of analytics. We need to get closer
   to real-time reporting. Part of that's going to happen as
   a result of tools that provide us with predictive analysis,
   the ability to dig down deeper and not destroy the
   nature of the data we are working on. Second, we may
   not just be auditing financial data in the future. We may
   be auditing people's ability to handle issues. We may be
   handling total nonfinanclal issues relative to a product's
   performance. So, whatever it might be, the markets are
   going to start looking for sources that can provide them
   with secure and trusted information and opinions. And
   if we do it right, I think the CPA profession can move
   five to 10 notches ahead of where we are even today.
   What are we going to need for that? We are going to
   need to look beyond the numbers. We are going to
   need to learn how to collaborate, and we need to think
   and behave more strategically ....Firms should focus on
   the access to data, the analytics, and really understanding
   what that data means, because there is so much
   knowledge In the data.

The panel went on to address smart contracts, leveraging the cloud and the internet of things, and more. The loads of parallels between the accounting and appraisal professions that are interesting and worthy of thought by appraisers.

Closely related to this article is "Accounting Firms: The Next Generation," which appears in the same issue. It provides a look at a future dominated by fast access to big data propelled by intelligent technology.

"Technology Q&A," is a regular monthly column the Journal of Accountancy; it offers helpful information on display of data in Microsoft Excel and Word. To see a full list of technology topics covered in this column, visit the Journal of Accountancy homepage and select the "Technology" tab ( Below is a sample of some of the technology topics covered in the column:

* "Convert Your Excel PivotTable to a Formula-Based Report" (May 2018)

* "4 Skills Accountants Need to Succeed in a Tech-Enabled Future" (June 1, 2018)

* "How to Debug Excel Spreadsheets" (November 1, 2015). These techniques can help find or fix errors hidden in hundreds, or even thousands, of rows, columns, and formulas.

* "How to Unpivot Data in Excel" (June 2016)

* "Mapping Tools on Excel 2016" (March 2017)

* "Microsoft Excel: Create a Picture-Based Dashboard Report" (August 2018). This article covers various types of graphs with spreadsheets and tables.

* "Microsoft Excel: How to Use Scenario Manager" (November 2018). This Excel tool is useful when you save multiple versions of the same Excel file with differing assumptions--such as different operating income calculations or proforma, different capitalization variables, or different assumptions underlying DCFs for appraisal, marketability studies, and such.

* "Microsoft Office: Use Excel's I-Beam Tool to Swap Data in 2 Cells" (June 2018)

* "Protect Your Online Privacy with a VPN" (June 2018)

* "Rules for Designing Excel Workbooks"

(May 2017)

* "The Single Factor of Most Concern in the Cloud" (June 2017)

* "3 Ways to Calculate Internal Rate of Return in Excel" (February 2017)

* "What Fonts Work Best in Excel?" and "Tricks for Typing in Word Tables"

(April 2017)

* "What Should Organizations Move to the Cloud?" (January 2018)

Articles Related to Firm Management

The Journal of Accountancy also includes articles on practice management topics that may be helpful to appraisal firms or departments; below is a sampling.

"How to Increase CPAs' Happiness on the Job," by Alex Granados (19) addresses employee job satisfaction and retention, focusing on three critical factors, and how just "a few policy changes can make retention and recruiting easier." Just substitute "appraiser" or your designation in the valuation profession for "CPA" to get a sense of the applicability of the discussion. "Retention," by Courtney Vien, (20) also addresses problems and solutions for management.

Additional Reading from accountancy-related publications on the topic of professional management include the following:

* Journal of Accountancy

* "Flexibility as a Retention Tool"

(February 1, 2017,

* "1RS Pursuing Self-Employment Taxes from LLC Members"

(May 1, 2018,

* "Nurturing the Human Element"

(July 1, 2016,

* CPA Insider

* "How to Curtail Office Gossip"

(November 26, 2018,

* "How to Coach a Problem Employee: The Insecure Employee"

(November 12, 2018,

Management articles and advice also can h found in the "Leadership, Communication an Professional Skills" section of the Journal c Accountancy website (! The topics covered there include:

* 6 tips for creating an effective team culture;

* Keep your inbox from running your workday;

* How to boost your creativity;

* How to break a digital addiction;

* 13 signs that your firm is outdated;

* Stop putting up with putting it off;

* How to coach a problem employee: The know-it-all;

* How to use content marketing to attract clients;

* Steps for improving your writing skills;

* How to practice mindfulness and lessen stress;

* How to break a bad habit;

* Get people to meet your deadlines;

* How to give constructive criticism that gets results; and

* 3 common writing errors that can undercut your professionalism; and many others.


The valuation profession has a lot in common with other professions, including accountancy. It is beneficial to learn from others and discover what knowledge we can apply to our own situations and our own profession.

Dan L. Swango, PhD, MAI, SRA, is president of Swango Real Estate Counseling and Valuation International in Tucson, Arizona. He is experienced in valuation and consulting involving equity investment, debt security, risk reduction, profit optimization, estate planning and settlement, buy/sell opportunities, and eminent domain. Swango is an instructor and communicator with domestic and international experience. He is namesake of The Appraisal Journal's Swango Award, past Editorial Board chair and editor-in-chief of The Appraisal Journal, and a current member of the Journal's Review Panel. Contact:

If you know of additional resources of interest to real estate analysts and valuers--or would like to suggest topics for this column--please contact the author.

For easy, direct access to the URL addresses noted throughout this article, read this column online. Go to and click on "View Current Issue." (Login required.) If using the print copy, the longer URLs have been shortened for easier entry.

(1.) The Journal of Accountancy's, homepage also includes direct links to the AlCPA's newsletters, The Tax Adviser and CPA Insider. To see the full list of AICPA newsletters, go to

(2.) June 1, 2016,

(3.) Lauck frequently cites the work of Nobel Prize-winning psychologist Daniel Kahneman, the author of Thinking, Fast and Slow (, which was reviewed in The Appraisal Journal Spring 2016 issue.

(4.) Also see "Benford'sLaw in Appraising" by Mark Pomykacz, Chris Olmsted, and Katherine Tantinan, The Appraisal Journal (Fall 2017): 274-284.

(5.) The regression to the mean may also be to the trend as a mean.

(6.) February 1, 2015, Although this piece is three years old, it definitely is not outdated or obsolete.

(7.) January 1, 2018, This article concerns the FASB update 2016-02 aimed at increasing transparency in financial reports.

(8.) FASB is a private, non-profit standard-setting organization whose primary purpose is to establish and improve Generally Accepted Accounting Principles (GAAP) within the United States in the public's interest. The Securities and Exchange Commission (SEC) designated FASB as the organization responsible for setting accounting standards for public companies in the United States; see

(9.) For more on leases, take a look at the Journal of Accountancy's legal articles, "Drafting Real Estate Leases with Taxes in Mind," by Wayne E. Nix, CPA, DBM, JD, and Ray A. Knight, CPA/PFS, CGMA, JD (June 2016, and "Bringing Leases into View," by Maria L. Murphy, CPA (April 1, 2016,

(10.) December 1, 2017,

(11.) May 1, 2018, (While in the May 1, 2018 issue, some appraisers may have an interest in reading "1RS Pursuing Self-Employment Taxes From LLC Members.")

(12.) August 1, 2018,

(13.) Non-verbal communication of more obvious in the case of face-to-face conversation when most non-verbal communication is through body language and facial expression.

(14.) December 1, 2017,

(15.) January 1, 2017,

(16.) Pivot tables may be helpful for market analysts and appraisers analyzing and reporting data; for basic information see and, or for good basic videos see and or

(17.) July 1, 2017, and For more information about blockchain technology, with numerous resource links, see "Cryptocurrencies, Blockchains, Bitcoin, and Money that Is--and Is Not" in Resource Center, The Appraisal Journal (Spring 2018): 140-147.

(18.) June 1, 2018, Also see part 2 of this article, "Merging Accounting with 'Big Data' Science," July 1, 2018,

(19.) June 2016,

(20.) May 1, 2017,
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Title Annotation:Resource Center
Author:Swango, Dan L.
Publication:Appraisal Journal
Article Type:Column
Geographic Code:1USA
Date:Sep 22, 2018
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