ASK AN INSTRUCTOR: Is my expert witness report of an appraisal USPAP compliant?
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Friday, April 8, 2016 in Ask an Instructor
ISA members are invited to send in their questions on all things appraising and education to Leon Castner, ISA CAPP. Leon, or one of ISA's other instructors, will share answers on the ISA Now Blog. Please send questions to leoncastner@comcast.net.
Question: I'm being considered for an expert witness assignment. My expert report in this case would not be an appraisal. A small part of the project would be to confirm the data and approach contained in an existing appraisal report on the subject.
Since my report will not be an appraisal, I do not want to perform a formal USPAP appraisal review of the existing report. I would like to speak to the data contained in the report and the approach. I feel the approach was solid. I reviewed the data and found it credible.
Would I be violating USPAP by referencing the report without performing a formal USPAP compliant review? My intention would be to disclose that referencing the data contained in the report is not, and should not be considered to be a review.
Answer: If you are reviewing someone else’s appraisal report, it is an appraisal review and must conform to USPAP. This could include a review of partial parts of the report, the methodology, the principles, the “approach,” and/or the valuation itself. It doesn’t have to include the entire report and may not even cover the valuation section, but it is still an appraisal review. According to FAQ #294 (page 353), an appraisal review is:
The act or process of developing and communicating an opinion about the quality of another appraiser’s work that was performed as part of an appraisal or appraisal assignment.
The keys to understanding whether this is an appraisal review rather than a consultation or something else is:
- Was the work under review an appraisal?
- Was the work performed as an appraisal or appraisal review?
If you were asked to review a market data summary or any document that did not include any opinion(s) of value, it would not be called an appraisal review. You could do that without conforming to USPAP 3, 7, or 8, but you would still be under certain portions of USPAP, i.e. Definitions, Preamble, Ethics, Competency, and Jurisdictional Exception rules.