An appraiser stores workfiles in a cloud service. What obligation does the Ethics Rule impose?
Correct Answer
A) That confidential information remains protected
The duty to protect confidential information and assignment results continues when files are stored electronically or by a cloud provider. Evaluate access, security, provider terms, and any applicable privacy laws, client authorizations, and engagement requirements. USPAP does not itself impose a universal same-state provider or paper-duplicate rule. A vendor contract alone does not discharge the appraiser’s obligations or automatically authorize every secondary use of the information.
Why This Is the Correct Answer
Option A is correct because USPAP requires an appraiser to take reasonable steps to safeguard access to confidential information and assignment results by unauthorized individuals, whether in physical or electronic form. Storing workfiles with a cloud provider does not relieve the appraiser of that duty, so access controls, security and provider terms should be evaluated.
Why the Other Options Are Wrong
Option B: That the provider be located in the same state
Option B requires the provider to be located in the same state. USPAP does not impose a same-state provider rule; the obligation is to keep confidential information protected.
Option C: That the client approve the provider in writing
Option C requires the client to approve the provider in writing. USPAP itself does not require client approval of a storage provider, although an engagement agreement or other law could add such terms.
Option D: That paper duplicates be retained alongside them
Option D requires paper duplicates alongside the electronic files. USPAP does not impose a paper-duplicate rule; electronic workfiles are acceptable if confidentiality and retention duties are met.
Same duty, any format
Paper cabinet or cloud server, confidentiality follows the file.
How to use: Use this to answer questions about electronic storage, email or cloud services.
Exam Tip
Choose the answer that states the confidentiality duty itself rather than a specific storage method USPAP does not require.
Common Mistakes to Avoid
- -Thinking USPAP requires paper backups of electronic workfiles
- -Assuming a vendor contract transfers the confidentiality duty to the vendor
- -Believing the storage provider must be in the appraiser's state
Concept Deep Dive
Analysis
This question tests the Ethics Rule's confidentiality duty applied to electronic storage. The duty to safeguard confidential information applies whether records are physical or electronic. The wrong options add requirements that USPAP does not impose.
Background Knowledge
The Confidentiality section of the Ethics Rule covers information in any form. Appraisers must take reasonable steps to prevent unauthorized access and must make sure others who may access the information are aware of the prohibitions on disclosure.
Real-World Application
An appraiser moves her workfiles to a cloud service. She enables strong access controls, reviews the provider's security and data-use terms, and makes sure her assistant understands not to share client files.
More USPAP Questions
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According to USPAP, what is the primary purpose of the Ethics Rule?
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