Changes ahead: Six important revisions to USPAP for the 2018-19 edition.
1. Communicating assignment results
The newest edition of USPAP includes new measures addressing the communication of assignment results outside the parameters of a report. Prior editions failed to address assignment results other than appraisal and appraisal review opinions communicated in a report. The change extends the Ethics Rule prohibition against the use or communication of misleading or fraudulent results to include any communication of assignment results, regardless of where an appraiser is in the appraisal or review process.
The Ethics Rule now reads:
* An appraiser must not use or communicate a report or assignment results known by the appraiser to be misleading or fraudulent, (emphasis added)
* An appraiser must not knowingly permit an employee or other person to communicate a report or assignment results that are misleading or fraudulent, (emphasis added)
Note: The communication of assignment results developed as part of an appraisal or review assignment is not by definition a "report." Communication of appraisal or appraisal review assignment results becomes a report when it is made upon completion of the assignment.
2. Definition of report
The revised definition of a report is expanded to include communication to parties authorized by the client, such as an accountant or an attorney. This is a marked change from the 2016-17 edition of USPAP, under which an appraisal or appraisal review that is communicated to anyone other than the client does not qualify as a report. The revision states:
* Any communication, written or oral, of an appraisal or appraisal review that is transmitted to the client or a party authorized by the client upon completion of an assignment, (emphasis added)
3. Record keeping
Changes for communication of assignment results outside the bounds of a report were made to the Record Keeping Rule, which states:
* A work file must be in existence prior to the issuance of any report or other communication of assignment results, (emphasis added)
The Record Keeping Rule requires retention of all reports; however, by definition, anything transmitted prior to completion of the assignment is not a report. The 2018-19 USPAP does not specifically address whether preliminary communications, including prior versions of the report, must be retained.
4. Definition of extraordinary assumption
Revisions to the definition of extraordinary assumption only serve to clarify that an extraordinary assumption is related to factors or uncertain data that serve as the basis for the assignment results. The definition is not altered in meaning or application.
In contrast, appraisers make assumptions in their reports based upon customary facts and circumstances.
5. Appraisal review standards
A major structural change for the 2018-19 USPAP involves dividing Standard 3, Appraisal Review, into separate development and reporting standards, a setup similar to what's used for real property appraisal Standards 1 and 2. Users of the new edition will now see Standard 3, Appraisal Review, Development, and Standard 4, Appraisal Review, Reporting. The split does not revise, add or remove any requirements for appraisal review.
6. New and revised guidance
Revisions to Advisory Opinion 1, Sales History, respond to concerns that the required analysis of a subject property's previous and pending sales and its current listing is seen as simply reciting facts and not as an examination of factors relevant to the assignment. The revised guidance addresses proper application of the requirement by providing clearer direction and supporting examples of what constitutes an adequate discussion in the report.
Revisions to Advisory Opinion 31, Assignments Involving More Than One Appraiser, clarify the concept of significant appraisal assistance and provide additional examples of what constitutes significant appraisal assistance.
New Advisory Opinion 37, Computer Assisted Valuation Tools, addresses appraiser obligations when relying upon adjustments, trend analyses or other information generated by software or online services commonly used by appraisers but not covered in Advisory Opinion 18, Use of an Automated Valuation Model.
* A complete summary of actions related to the 2018-19 edition of USPAP can be found online at http://bit.ly/USPAP-2018-19.
by Gregory J. Accetta, MAI, AI-GRS
About the Author
Gregory J. Accetta, MAI, AI-GRS, works in Providence, Rhode Island, as a commercial review appraiser for a national bank. He is a former chair of the Appraisal Standards Board, an Appraiser Qualifications Board-certified USPAP instructor, and an educator for the Appraisal Institute and other organizations.
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|Title Annotation:||Front Lines: REPORTS AND INSIGHTS FROM THE FIELD|
|Author:||Accetta, Gregory J.|
|Date:||Sep 22, 2017|
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