What must a report disclose about the extent to which the appraiser relied on another professional's work?
Correct Answer
D) What was relied upon and the extent of reliance
Why this is correct: USPAP's reporting standards require disclosure of the extent to which the appraiser relied on the work of others (e.g., an engineer). The report must state what specific work was relied upon and the degree of that reliance so readers can assess the support for the appraisal conclusions. Why the other choices are wrong: The choice stating nothing, provided the professional was licensed, is incorrect; reliance must be disclosed regardless of licensure. The choice to disclose only the total cost is wrong; cost does not inform the reader about the nature of reliance. The choice to disclose only the name and license number is false; this does not convey what was relied upon or to what extent. Exam tip: Disclose both the 'what' and the 'how much' when relying on another expert's work.
Why This Is the Correct Answer
Why this is correct: USPAP's reporting standards require disclosure of the extent to which the appraiser relied on the work of others (e.g., an engineer). The report must state what specific work was relied upon and the degree of that reliance so readers can assess the support for the appraisal conclusions. Why the other choices are wrong: The choice stating nothing, provided the professional was licensed, is incorrect; reliance must be disclosed regardless of licensure. The choice to disclose only the total cost is wrong; cost does not inform the reader about the nature of reliance. The choice to disclose only the name and license number is false; this does not convey what was relied upon or to what extent. Exam tip: Disclose both the 'what' and the 'how much' when relying on another expert's work.
More USPAP Questions
Reconciliation of the approaches to value is best described as which activity?
Why should the reconciliation address the quantity of evidence as well as its quality?
How long must a report be retained compared with the workfile?
What distinguishes an appraisal review from an appraisal?
An appraiser reconciles to a value at the top of the indicated range because the client needs that figure. What has occurred?
What does it mean that a value opinion must be reasonable rather than merely arithmetically derived?
What should the reconciliation section explain to the reader?
How do the content obligations of the two report options differ with respect to the information analyzed?
The three approaches indicate $480,000, $495,000 and $610,000. What should the appraiser do first?
Three approaches indicate $1.02 million, $1.05 million and $1.04 million. How should this be reported?
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