After delivery, an appraiser finds a material arithmetic error in an appraisal of value as of May 1. The correction addresses the same May 1 value question. Which response is appropriate?
Correct Answer
A) Correct the analysis and tell the client, keeping the May 1 effective date
A material error should not be ignored or left as a knowingly misleading communication. Assess its effects and provide an appropriate supported correction with accurate report identification and retained original and corrected records. The value effective date remains May 1 when that is the same assignment question; the corrected communication has its actual report date. Client and recipient communications must respect confidentiality and authorization. SR 2-3 is the certification rule, not a universal notification-format protocol.
Why This Is the Correct Answer
Option A is correct because an appraiser must not commit a substantial error that significantly affects an appraisal and must set forth the appraisal in a manner that will not be misleading. Correcting the error and communicating the correction to the client addresses both duties. The effective date is the date to which the analyses apply, so it stays May 1 when the corrected work answers the same May 1 question, while the corrected report carries its actual report date.
Why the Other Options Are Wrong
Option B: Wait for the client to discover the error and then decide what to do
Option B says to wait for the client to discover the error. Knowingly leaving a materially misleading report uncorrected is inconsistent with the duty not to communicate misleading results.
Option C: Make a private workfile note without addressing the misleading report
Option C says to make a private workfile note without addressing the misleading report. A workfile note alone leaves the misleading report in the client's hands, so it does not fix the problem.
Option D: Move the effective date to today because the arithmetic was corrected
Option D says to move the effective date to today because the arithmetic was corrected. The effective date is the date to which the analyses apply; the same May 1 value question keeps May 1, and only the report date reflects when the correction is issued.
Fix the math, keep the date
A corrected report fixes the numbers but keeps the original date of value; only the report date is new.
How to use: Use this when a question asks how a post-delivery correction affects dates.
Exam Tip
Separate the effective date from the report date. A correction to the same assignment question keeps the effective date.
Common Mistakes to Avoid
- -Changing the effective date when correcting an error
- -Recording the error only in the workfile
- -Waiting for the client to notice a material error
Concept Deep Dive
Analysis
This question tests the response to a material error found after delivery and the difference between effective date and report date. USPAP prohibits substantial errors that significantly affect an appraisal and requires reports that are not misleading. Correcting the analysis for the same value question keeps the original effective date.
Background Knowledge
USPAP distinguishes the effective date (date of value) from the date of the report. Standards Rule 1-1 addresses substantial errors in development, and Standards Rule 2-1 requires reports that are clear, accurate and not misleading.
Real-World Application
Two weeks after delivering a report, an appraiser notices she misadded a site adjustment, materially changing the value. She corrects the analysis, issues a corrected report with the May 1 effective date and a new report date, notifies the client, and keeps both versions in her workfile.
More USPAP Questions
In a cost approach for an improved property, an appraiser estimates site value by sales comparison, allocation and extraction, then settles on one site-value figure before final reconciliation. How is this step best described?
An extraordinary assumption was reasonably supported, properly used and disclosed in an appraisal report. Later, the assumed information is found to be false. Which conclusion is best supported?
An otherwise applicable valuation approach cannot be developed reliably from the available data. The remaining scope can produce credible assignment results. What should the appraiser do?
May an appraiser use a hypothetical condition in any assignment?
An appraisal has a current effective date and permits an extraordinary assumption if its requirements are met. Which situation involves uncertain information rather than a fact known to be contrary to reality on that date?
Why must a report identify any real property interest that is being excluded from the value opinion?
Which review best helps explain divergent cost, sales-comparison and income indications?
Two value indications are $340,000 and $392,000. What is the difference as a percentage of the lower indication, rounded to one decimal place?
An unauthorized third party requests a lender-client’s report. No due-process or other permitted disclosure exception applies. How should the appraiser respond?
An appraiser proposes to assume there are no hidden defects. Which fact would characterize that assumption as extraordinary under the USPAP 2024 definition, rather than justify dismissing it as routine boilerplate?
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