Uniform Standards of Professional Appraisal Practice (USPAP)
In this guest blog, Robert Podwalny, FASA, gives an overview of the Appraisal Review and Management (ARM) field of the appraisal profession, explaining why appraisal review is needed, what an appraisal review involves, who is qualified to review appraisals, and the opportunities available in this quickly-growing area of the appraisal profession.
One of the largest group of valuation users — the financial community — generally does not understand the valuation process and only looks at a valuation to see if the dollar amount is above or below the outstanding balance for loans, leases or mortgages. Over time, this on-going and customary acceptance of substandard appraisals has been surprisingly workable, but in several historic instances, the federal government has had to step in with bail-out programs to save the financial community from the results of habitually accepting these inappropriate appraisals.
UPDATE, March 8, 2012: We got a call this morning from the fine folks at the Appraisal Foundation asking us to remove the link to the free Gold app USPAP publication originally included in this blog, so you will not be able to click through to that. The flip book link was allowed to stay.
As many of you know, USPAP (Uniform Standards of Professional Appraisal Practice) has been updated with a new edition. The Appraisal Foundation offers a link to a USPAP “flip book,” which includes the quasi-cool sound effect of pages flipping as you “leaf” through the book.
A more practical source — and the one we downloaded here at our machinery and equipment appraisal office — may be this free 2012 -2013 USPAP.pdf available for download.
As a Sacramento equipment appraiser, I can verify that defining the scope of work is a critical first step in any appraisal process. Even before quoting a price on an equipment appraisal, we need to closely define our scope of work. Scope of work is defined by our friends at USPAP (Uniform Standards of Professional Appraisal Practice) as the type and extent of research and analyses in an assignment, and USPAP states in no uncertain terns that is the appraiser’s responsibility to determine and perform the appropriate scope of work.USPAP’s Scope of Work Rule states that an appraiser must
This is the second half of an article on the consequences of the Internal Revenue Service’s new and significant enforcement initiatives that specifically target abusive tax-related appraisals and the individuals who prepare them. The first half was published in a previous post; the article is authored by Jay Fishman, FASA, Business Valuation Review Editor and Chairman of the American Society of Appraisers Government Relations Committee; Bruce Bingham, ASA, former Chairman of the Business Valuation Committee; and Peter Barash, Government Relations Consultant to the Business Valuation Committee.
Internal Revenue Code Section 6701
I thought I’d pass along some information about the IRS’ strategy for Estate Tax Returns and their related appraisal. The moral of the story is to hire a qualified appraiser and save a lot of trouble. Because this article is so long, I’ve broken it into 2 separate posts. The second half will post next week.
By Jay Fishman, FASA, Bruce Bingham, ASA, and Peter Barash
Last week, I had the privilege of attending a USPAP Reaccreditation course especially for Machine & Technical Specialty appraisers taught by Roger Durkin, J.D., M.S., ASA, just over in San Francisco. The class was sponsored by the NorCal Chapter of the American Society of Appraisers, serving appraisers all over Northern California, including such hot spots as San Francisco, Oakland, Sacramento, Redding and San Joaquin County. The seminar was open to equipment appraisers everywhere and we had some nice folks from Arizona and Nevada there as well.
Here at our Northern California Certified Machinery and Equipment Appraisal office, the phone’s been ringing off the hook with calls from Sacramento and Yuba City banks and other northern California financial institutions asking for qualified SBA loan appraisals on machinery and equipment for collateralized loans. The recent passage of the Small Business Jobs Act (H.R. 5297) has galvanized the business loan market!
I’m proud & pleased to present a guest article with this reprint of the President’s Message from the Sept 2010 newsletter of the American Society of Appraisers NorCal Chapter. Thanks, Bob, for allowing us to share your message on our blog!
At a recent Northern California ASA meeting, I sat next to a retired IRS appraisal reviewer who answered the on-going question of qualified appraisers rather succinctly.
Off the record, he said, the IRS has such respect for the American Society of Appraisers designation that very few ASA-submitted appraisals are required to be passed up the chain for higher review.
As a Certified Public Accountant, I certainly understand the appeal of certification, and looking for a “certified” appraiser makes a lot of sense if by a certified machinery and equipment appraiser you mean an unbiased trained and knowledgeable professional who provides a report supporting an impartial opinion of value based on expert knowledge, adjusted comps and market research, in line with USPAP guidelines, ethics and appraisal procedures. Yeah, that’s what you want! Reports of this type will gladden the heart of your banker, lawyer, business partner and CPA.
In April, the American Society of Appraisers released a proposal to update the current Definitions of Value approved by the Machinery & Equipment Committee and the American Society of Appraisers Board of Governors.
Over the next few blogs, I’ll share the entire definition list, but today I’d like to concentrate on 2 areas that caught my attention right away:
The first thing I noticed was the insertion of the term “opinion” in most of the definitions.This makes a lot of sense as valuation is not an absolute measurement of value but one arrived at through research and, in the words of former PCAOB Chief Auditor Thomas Rays, “the appropriate application of seasoned professional judgment.”