The Overdue Desktop Review and the Client Deadline
You are a senior appraiser at a mid-sized firm. A long-standing bank client asks you to review a commercial equipment appraisal prepared by another firm, valuing a packaging plant's machinery at $4.2 million as of 90 days ago. The review is needed for a lending decision in five business days. The original report lacks a stated scope of work, does not identify which items were physically inspected versus valued desktop-only, and shows a single aggregate depreciation figure without breakdown. The client's relationship manager says: 'Just sign off on the value-we've worked with these appraisers for years and the number looks reasonable.' Your firm's policy requires a review report to state the scope of review and any limiting conditions. You have not yet seen the underlying workfile.
1. What should you do first, and how do you respond to the relationship manager's request to 'just sign off'?
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First action: Request the appraiser's workfile and confirm in writing what scope of review the client actually needs (administrative/compliance review vs. technical review vs. full review with independent verification). A review cannot be completed responsibly without the supporting documentation, especially given the missing scope statement and undifferentiated depreciation.
Response to the manager: Decline to sign off on the value as presented. Signing a review that endorses a value you have not substantiated would misrepresent your conclusions and breach the requirement that a review report clearly distinguish the reviewer's own opinions from the original appraiser's. Explain that the review can still meet the deadline if the workfile arrives promptly; if it does not, you will issue a review with a stated scope limitation and disclose that the value could not be fully corroborated. Do not let a client relationship override the integrity of the review conclusion.
2. The workfile arrives but is incomplete-inspection notes are missing for roughly 30% of the asset list. How should this affect your review report?
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Treat the gap as a scope limitation and disclose it prominently, not bury it. Specifically:
- State exactly which portion of the asset list lacks inspection documentation and what that means for reliability.
- Determine whether the original report's own scope (once clarified) actually claimed those items were inspected. If it did, that is a reporting deficiency or misrepresentation, which must be reported as a finding.
- Decide whether you can still reach a review conclusion. You may be able to concur with the value subject to the limitation, or you may conclude the value is not adequately supported. Either is defensible if reasoned and disclosed; silently ignoring the gap is not.
- Avoid substituting your own value opinion unless the engagement calls for it-if you do, label it clearly as your own independent opinion with its own scope and supporting analysis.
3. Draft the core conclusion language you would use if you find the value is broadly reasonable but the report is deficient in scope and depreciation disclosure.
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A defensible structure:
'Based on the scope of review described herein, which was limited by the absence of inspection documentation for approximately 30% of the asset list, I concur with the original appraiser's concluded value of $4.2 million as reasonable and adequately supported for the assets for which documentation was available. However, the original report is deficient in that it (1) does not state a scope of work, (2) does not distinguish inspected from desktop-valued items, and (3) presents depreciation only in aggregate, limiting the reader's ability to assess its derivation. These deficiencies should be corrected before the report is relied upon for lending purposes. My concurrence is subject to the limiting conditions stated in this review.'
Key features: separates value conclusion from report quality, states the limitation, and avoids implying the original report was error-free.