When should intended use inform an appraisal’s scope?
Correct Answer
B) During problem identification before determining the necessary research and analysis
Intended use is part of identifying the problem and informs the scope before research and analysis are determined. SR 1-2(b), rather than SR 1-2(f), addresses intended use. Problem identification can be refined during development; the rule does not make every clarification after an engagement automatically too late.
Why This Is the Correct Answer
Option B is correct because intended use is part of problem identification, which comes before determining the scope of work needed for credible results. USPAP addresses the elements needed for problem identification in SR 1-2, with intended use in SR 1-2(b). Problem identification can be refined as an assignment proceeds, but intended use should shape the research and analysis plan from the start.
Why the Other Options Are Wrong
Option A: After the final value is reported and the client has reviewed the completed report
Option A is wrong because waiting until after the final value is reported and the client has reviewed the report is far too late. Scope must already have been set before analysis was performed.
Option C: When a report recipient later asks how the report may be used
Option C is wrong because waiting until a report recipient later asks how the report may be used reverses the process. Intended use is identified at the outset with the client, not discovered afterward from recipients.
Option D: Only after selecting the value that satisfies the client
Option D is wrong because selecting the value that satisfies the client before considering intended use is advocacy and violates impartiality. Value must result from analysis, not be chosen to please anyone.
Use shapes scope
Identify the problem first, including intended use, then decide how much work is needed.
How to use: Use this when a question asks at what stage intended use affects the assignment.
Exam Tip
On sequencing questions, problem identification comes before scope of work, and both come before research and analysis.
Common Mistakes to Avoid
- -Treating intended use as something settled after the report is done
- -Letting a desired value drive the assignment
- -Confusing the intended use rule with another SR 1-2 subpart
Concept Deep Dive
Analysis
This question tests the sequence of the appraisal process. Intended use is an assignment element identified during problem identification, and the scope of work is then determined from those elements. So intended use must inform scope before research and analysis are decided.
Background Knowledge
The scope of work rule requires identifying the problem, determining and performing the scope needed for credible results, and disclosing that scope. Problem identification covers elements such as client, intended users, intended use, type of value, effective date, relevant characteristics and assignment conditions. Intended use drives how much research and analysis is needed.
Real-World Application
Before accepting an assignment, an appraiser learns the value will be used for an estate tax filing as of a past date. That intended use leads the appraiser to plan retrospective market research and a different set of comparables than a current lending assignment.
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