Michigan CG
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Does this document REALLY need to be updated every two years. The last "update" was a waste of 80,000 people taking a seven-hour class.
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Exposure Draft USPAP 2018-19 - Appraisal Foundation
- Thread starter Mike Kennedy
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George Hatch
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I'll say something else about this that might irritate people in certain quarters:
The SRs are extensions of the ETHICS RULE and the COMPETENCY RULE. If we really have the burning need to change what is and isn't an appraisal report or how we convey the results of the appraisal process, then perhaps those changes should be made at the fundamental level in the ETHICS RULE and the COMPETENCY RULE so that the SRs will continue to be the extension of those rather than stand alone requirements that exist separately and independently of them.
If the 2016 ASB wants to enable more client advocacy then they should just come out and do it in the open. If they think that's a reasonable expression of the concept of professional appraisal practice then they shouldn't have any problems just coming out with it - Say it loud and say it proud. 'Cause there's nothing honorable about trying to backdoor those actions under the guise that everyone else is too stupid to see what they're doing.
The SRs are extensions of the ETHICS RULE and the COMPETENCY RULE. If we really have the burning need to change what is and isn't an appraisal report or how we convey the results of the appraisal process, then perhaps those changes should be made at the fundamental level in the ETHICS RULE and the COMPETENCY RULE so that the SRs will continue to be the extension of those rather than stand alone requirements that exist separately and independently of them.
If the 2016 ASB wants to enable more client advocacy then they should just come out and do it in the open. If they think that's a reasonable expression of the concept of professional appraisal practice then they shouldn't have any problems just coming out with it - Say it loud and say it proud. 'Cause there's nothing honorable about trying to backdoor those actions under the guise that everyone else is too stupid to see what they're doing.
Pittsburgh Pete
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Narrow and uninformed viewpoint to call proposed changes an attempt at "client advocacy!" That's just not true --repeat as often as you like but that won't make it true.
George Hatch
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[shrugs] I don't hold my peers in contempt or presume to be smart enough to tell them how they should think. I'm content to express my opinions and the reasoning I'm using, and to let them decide for themselves what makes sense to them. That approach has been working for me pretty well over the years.
Pittsburgh Pete
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(sighs) but smart enough to characterize something in a manner that is wholly inappropriate, that in effect gives your peers little leeway on which way to think if they embrace your erroneous labeling!
George Hatch
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Whatevs
I don't assume (nor do I want) that anyone will embrace my reasoning - complete with whatever labels I may choose to use - on any other basis besides whether it makes sense to them. In fact, I expect that reasonable people will sometimes disagree and I fully expect everyone to disagree to me at least some of the time.
I don't assume (nor do I want) that anyone will embrace my reasoning - complete with whatever labels I may choose to use - on any other basis besides whether it makes sense to them. In fact, I expect that reasonable people will sometimes disagree and I fully expect everyone to disagree to me at least some of the time.
DWiley
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No, it doesn't. Ten years ago the ASB plan was to have moved to a four or five year cycle by now. I know that plan was shared with the Board of Trustees, because I was in the room. Unfortunately, with changes in membership, that goal seems to have been lost. The miniscule changes over the last few cycles has done little beyond strengthening the perception by many that changes are made strictly for the purpose of selling books and courses.
DWiley
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The ASB has now struggled for almost a decade over the issue of "draft" reports, and I think the reason that they cannot resolve the matter in a way that does not cause fundamental disruption throughout the USPAP document is simple - they are focusing on the wrong thing.
Standards should reflect common practice, not dictate it. In the "real world," once I have communicated something to someone, I am considered to have "reported" it. So, the notion that a "draft" is not a report just flies in the face of common sense. A "draft" is a "report" of some type. Until that is recognized, I don't think a good resolution can be achieved.
If the ASB believes that it should be recognized as acceptable practice to provide a "draft" that is something less than a "full and final report" then the solution lies in changing the report content requirements in STANDARD 2, not in messing with the definitions.
The "pro-draft" crowd's biggest point of contention seems to be keeping copies of those "drafts," and this is driven primarily by those who do litigation work and/or those who do business valuation. Outside of those two groups, the use of "drafts" is not common. I would wager that I have done more litigation work than 90% to 95% of credentialed appraisers, and I have provided "draft" reports in numerous cases. But under my state laws, those "drafts" were simply "reports," so my workfiles always contained true copies of those "drafts." While proponents throw out nightmare scenarios related to keeping copies of "drafts," in my real (not hypothetical) experience, keeping copies of "drafts" has never been an issue. If a change was made between a "draft" and a "final" report, there was always a good reason that could be easily addressed. Any attorney who tried to flame me for having a final report that was different quickly learned that was not good strategy.
On a personal note, I have been VERY disappointed by some in the "pro-draft" crowd who openly acknowledge that when it comes to "drafts" they simply ignore their own state laws. When someone knowingly chooses to do that, especially while they are a sitting member of the ASB, it diminishes their personal credibility. At least it does for me.
Standards should reflect common practice, not dictate it. In the "real world," once I have communicated something to someone, I am considered to have "reported" it. So, the notion that a "draft" is not a report just flies in the face of common sense. A "draft" is a "report" of some type. Until that is recognized, I don't think a good resolution can be achieved.
If the ASB believes that it should be recognized as acceptable practice to provide a "draft" that is something less than a "full and final report" then the solution lies in changing the report content requirements in STANDARD 2, not in messing with the definitions.
The "pro-draft" crowd's biggest point of contention seems to be keeping copies of those "drafts," and this is driven primarily by those who do litigation work and/or those who do business valuation. Outside of those two groups, the use of "drafts" is not common. I would wager that I have done more litigation work than 90% to 95% of credentialed appraisers, and I have provided "draft" reports in numerous cases. But under my state laws, those "drafts" were simply "reports," so my workfiles always contained true copies of those "drafts." While proponents throw out nightmare scenarios related to keeping copies of "drafts," in my real (not hypothetical) experience, keeping copies of "drafts" has never been an issue. If a change was made between a "draft" and a "final" report, there was always a good reason that could be easily addressed. Any attorney who tried to flame me for having a final report that was different quickly learned that was not good strategy.
On a personal note, I have been VERY disappointed by some in the "pro-draft" crowd who openly acknowledge that when it comes to "drafts" they simply ignore their own state laws. When someone knowingly chooses to do that, especially while they are a sitting member of the ASB, it diminishes their personal credibility. At least it does for me.
hastalavista
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I've given this some more thought and remain persuaded that the conceptual idea of a draft report is a benefit and not a detriment.
I acknowledge the abuses that took place pre-USPAP. But we have USPAP now. As I said earlier (and as I think Danny's last paragraph above confirms) there are those who are going to violate USPAP regardless of what it says or no matter what its intent is. The Ethics Rule clearly states that assignment results, no matter how they are communicated, cannot be done in a manner that is misleading or fraudulent. All other provisions of the USPAP's ethics are in force for developing those results.
If the conceptual idea of a draft communication is beneficial, then the issue is what is the best method to introduce it, and if introduced, what are the concerns that should be addressed prior to its introduction?
Is it better to introduce the concept of the draft report by rewriting SR2 or by altering the definition of what a "report" is and expanding it to include what a "draft report" would be? For me, I don't have the issue with making the differentiation in the definition.
There are two basic parts of an appraisal assignment: Development and Communicating the Results
The analysis goes through the SR-1 machine. The communication goes through the SR-2 machine:
A report that goes through the SR-2 machine comes out with a signed certification and falls into a bucket that says it must be retained as per the Record Keeping Rule.
A draft report that goes through the SR-2 machine comes out with a prominent label that it is a "Draft", does not have a signed certification, and doesn't fall into the bucket with the Record Keeping Rule.
Do we need to create two SR-2 machines in order to make sure that a report gets its certification and is subject to record retention requirements and to make sure that a draft doesn't get a signed certification, is prominently labeled as a draft, and isn't subject to the Record Keeping Rule?
I wouldn't think so. But, if that is the only roadblock (which I know it isn't), then OK. Let's write another communication rule so one gets its signed certification and is kept, and the other gets a prominent label identifying it as a draft, no signed certification, and it is not subject to the Record Keeping Rule.
The enforcement aspect (for me) is the serious challenge here. I would think there are practical means to eliminate any conflict that a draft-report concept would create with a state law (I believe that many states incorporate the USPAP by reference, so there shouldn't be any conflict for those states unless their regulations go further). If the concept of the draft report is going to be adopted, I'd rather wait to ensure it can be introduced to eliminate the contradictions with state law and with minimal disruption to the enforcement process. If that means waiting another 2-years, I'm fine with that as well.
I acknowledge the abuses that took place pre-USPAP. But we have USPAP now. As I said earlier (and as I think Danny's last paragraph above confirms) there are those who are going to violate USPAP regardless of what it says or no matter what its intent is. The Ethics Rule clearly states that assignment results, no matter how they are communicated, cannot be done in a manner that is misleading or fraudulent. All other provisions of the USPAP's ethics are in force for developing those results.
If the conceptual idea of a draft communication is beneficial, then the issue is what is the best method to introduce it, and if introduced, what are the concerns that should be addressed prior to its introduction?
Is it better to introduce the concept of the draft report by rewriting SR2 or by altering the definition of what a "report" is and expanding it to include what a "draft report" would be? For me, I don't have the issue with making the differentiation in the definition.
There are two basic parts of an appraisal assignment: Development and Communicating the Results
The analysis goes through the SR-1 machine. The communication goes through the SR-2 machine:
A report that goes through the SR-2 machine comes out with a signed certification and falls into a bucket that says it must be retained as per the Record Keeping Rule.
A draft report that goes through the SR-2 machine comes out with a prominent label that it is a "Draft", does not have a signed certification, and doesn't fall into the bucket with the Record Keeping Rule.
Do we need to create two SR-2 machines in order to make sure that a report gets its certification and is subject to record retention requirements and to make sure that a draft doesn't get a signed certification, is prominently labeled as a draft, and isn't subject to the Record Keeping Rule?
I wouldn't think so. But, if that is the only roadblock (which I know it isn't), then OK. Let's write another communication rule so one gets its signed certification and is kept, and the other gets a prominent label identifying it as a draft, no signed certification, and it is not subject to the Record Keeping Rule.
The enforcement aspect (for me) is the serious challenge here. I would think there are practical means to eliminate any conflict that a draft-report concept would create with a state law (I believe that many states incorporate the USPAP by reference, so there shouldn't be any conflict for those states unless their regulations go further). If the concept of the draft report is going to be adopted, I'd rather wait to ensure it can be introduced to eliminate the contradictions with state law and with minimal disruption to the enforcement process. If that means waiting another 2-years, I'm fine with that as well.
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