Standards of Professional Practice and Ethics
The standards framework
Candidates must know the structure of the profession's standards: the ethics and competence rules, the development and reporting requirements, and the rules governing review and consulting. Core obligations include:
- Competency - decline or disclose and take steps to become competent.
- Departure from requirements - permissible only when necessary and when the report discloses the departure, the reason, and that it may affect credibility.
- Jurisdictional exception - when law conflicts with a standard, the standard yields to the extent of the conflict, and the report discloses it.
- Record keeping - retain the workfile for the required period.
- Confidentiality - client information is not disclosed without authorization or legal compulsion.
- Advocacy prohibition - the appraiser may not advocate for a predetermined value or a client's cause.
- Contingent fees - compensation may not be contingent on a value, a loan amount, or a predetermined outcome.
Review-specific rules
A review must identify the report reviewed, the scope, and the reviewer's opinion of the work's adequacy and credibility. If the reviewer signs a report as the appraiser of record, the reviewer assumes the full development and reporting obligations.
Traps
- Believing a departure from standards is always a violation - it is permitted with disclosure when necessary.
- Confusing confidentiality with a duty to withhold information from the client who engaged you.
- Missing that advocacy is prohibited even when the appraiser believes the cause is just.
- Overlooking that a reviewer who concurs in value has reporting obligations of their own.
Rule of thumb
When a question describes pressure to hit a number, look for the ethics violation. When it describes an unusual but disclosed methodology, look for a permissible departure.