A client requests an appraisal with an extremely limited scope of work that the appraiser believes is insufficient for credible assignment results. The appraiser should:
Correct Answer
A) Seek a credible scope or qualified assumption if permitted; otherwise decline or withdraw
Revise the assignment conditions to allow the needed work or, where appropriate, use an extraordinary assumption that satisfies its conditions and preserves credibility. Withdraw if credible results cannot be produced. A disclaimer or proportional reduction based on budget cannot replace the needed support.
Why This Is the Correct Answer
Option A is correct because USPAP allows the appraiser to modify the assignment conditions to expand the scope of work, or to use an extraordinary assumption if credible assignment results can still be developed. If neither path produces credible results, the appraiser should decline or withdraw. This respects the rule that assignment conditions must not limit scope to the point of non-credible results.
Why the Other Options Are Wrong
Option B: Expand the scope of work without informing the client
Option B says to expand the scope of work without informing the client. Expanding scope changes the assignment conditions agreed with the client, so it should be done through communication with the client rather than silently.
Option C: Complete the assignment as requested but disclaim responsibility for the results in the report
Option C says to complete the assignment as requested but disclaim responsibility in the report. A disclaimer does not make non-credible results acceptable or replace the work needed to support them.
Option D: Accept the assignment as requested to satisfy the client
Option D says to accept the assignment as requested to satisfy the client. Accepting a scope the appraiser believes cannot produce credible results violates the requirement that assignment conditions not limit scope to that degree.
Expand, assume, or walk away
When a client's scope is too thin, the appraiser can expand the scope, use a valid extraordinary assumption, or decline or withdraw. Disclaimers are not on the list.
How to use: Use this to identify acceptable responses to an inadequate scope of work.
Exam Tip
Options that rely on a disclaimer or silent changes to fix a credibility problem are usually wrong; look for the option that preserves credibility through proper means.
Common Mistakes to Avoid
- -Believing a disclaimer cures an inadequate scope of work
- -Changing the scope without communicating with the client
- -Accepting any client-imposed limit to keep the business
Concept Deep Dive
Analysis
This question tests what an appraiser does when assignment conditions would limit the scope of work below what credible results require. USPAP prohibits letting assignment conditions limit scope to the point that results are not credible. The appraiser can modify the conditions to expand scope, use a supportable extraordinary assumption if credible results can still be developed, or decline or withdraw.
Background Knowledge
Under the Scope of Work Rule, credibility is judged in the context of the intended use. Assignment conditions, including client limits on inspection or research, cannot be allowed to reduce scope so far that results lose credibility. Extraordinary assumptions can bridge some information gaps only when their use meets USPAP conditions.
Real-World Application
A client wants a value opinion on a rented fourplex without allowing any review of the leases. The appraiser explains that income data are needed, proposes adding the leases to the scope, and would decline if the client refuses and no supportable assumption is possible.
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According to USPAP, what is the primary purpose of the Ethics Rule?
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