ASA AM common mistakes
ASA AM · Understand the traps and how to avoid them.
On an ARM review assignment, the candidate rewrites or re-performs the original valuation (substituting their own value conclusion) instead of evaluating the work under review against applicable standards.
Candidates conflate 'review' with 'appraisal'; a review opines on the quality/conformity of another appraiser's work, and producing a new value conclusion exceeds or changes the review scope.
What to do instead
Before writing, state the review's scope and the standard applied (e.g., USPAP Standards 3/4), then frame each finding as conformity/non-conformity with cited support; reserve any independent value opinion for a separately scoped appraisal engagement.
The candidate omits or misstates the review's scope of work and the reviewer's own certification/limiting conditions, treating them as boilerplate.
Templates are copied without tailoring, so assumptions, extraordinary assumptions, and the reviewer's independence are never disclosed or are inconsistent with the actual work done.
What to do instead
Draft a scope-of-work section that lists exactly what was inspected, verified, and relied upon, then cross-check every extraordinary assumption against the analysis; include the reviewer's signed certification consistent with the scope.
In a BV engagement, the candidate selects guideline companies or transactions without documenting and applying objective screening criteria, then uses the resulting multiples uncritically.
Convenience and data availability drive selection; comparability adjustments (size, growth, margins, risk) are skipped, and the subject's differences from the guideline set are never reconciled.
What to do instead
Write explicit inclusion/exclusion criteria before screening, tabulate each guideline company against them, apply and support qualitative/quantitative adjustments, and reconcile the concluded multiple to the subject's specific risk profile.
The candidate applies a control premium or marketability discount without establishing the appropriate basis (minority vs. controlling interest, marketable vs. non-marketable) and stacks discounts without testing for double counting.
Discount/premium language is memorized as a checklist; the candidate loses track of what the base value already reflects and whether each adjustment is being applied to the correct level of value.
What to do instead
State the subject interest's level of value first, map each premium/discount to the specific characteristic it captures, and show an explicit reconciliation table proving no characteristic is adjusted twice.
On GJ items, the candidate identifies a stone or metal from appearance or a single test rather than a full, documented testing protocol, and omits the basis for weights and grades.
Time pressure and reliance on an unaided loupe or one instrument lead to unverified identification; carat weight, clarity, and color are recorded without noting method or equipment.
What to do instead
Record a step-by-step identification protocol (e.g., refractometer, polariscope, spectroscope, magnification) with each result, and state the measurement method and equipment for every weight and grade reported.
The candidate values jewelry using a retail or replacement-cost figure as if it were the appropriate value type for the assignment, without reconciling the value definition to the intended use.
Retail price tags and insurance replacement figures are easy to obtain and get substituted for the value type the client actually needs (e.g., fair market value, liquidation).
What to do instead
State the value definition and intended use at the outset, select the market level consistent with it, and document why the chosen comparables and market data match that value type rather than defaulting to retail.
In an MTS assignment, the candidate values machinery without establishing the correct premise (e.g., in-place vs. orderly liquidation vs. forced liquidation) and mixes data from incompatible premises.
The premise is assumed rather than stated, so installation/removal costs, market conditions, and comparable sales from different premises get blended into one conclusion.
What to do instead
Define the premise and value type explicitly, then segregate cost and market data by premise and show how installation, removal, and time-to-sell factors are applied consistently to the selected premise.
The candidate omits or misapplies physical, functional, and economic obsolescence in a cost approach for machinery, or double counts depreciation already reflected in the data.
Obsolescence is treated as a single lump adjustment; the candidate does not document how each form of depreciation was measured or whether market data already embed it.
What to do instead
Build a depreciation schedule that separately quantifies and supports physical deterioration, functional obsolescence, and economic obsolescence, and state which components are already captured in any market-derived figures.
On a personal property assignment, the candidate fails to establish and document the property's identity, quantity, and condition (inventory, serial numbers, photographs) and relies on a client-provided list without verification.
Client schedules are accepted at face value; no physical verification or condition notes are made, so the report cannot support the value conclusion or the property's existence.
What to do instead
Perform and document an item-level verification (count, identify, condition, photograph), reconcile the verified inventory to the client list, and disclose any sampling method and the resulting limitation in the report.
In a real property report, the candidate states a highest and best use conclusion without supporting the four tests (legally permissible, physically possible, financially feasible, maximally productive) or tests only the current use.
The HBU section is treated as a required formality and copied from the existing use, so alternatives are never analyzed and the conclusion is unsupported.
What to do instead
Run each of the four tests explicitly for the subject as vacant and as improved, document the data and reasoning for each, and tie the selected HBU directly to the approach(es) relied upon in the valuation.