Which of the following would constitute a violation of the Ethics Rule regarding conduct?
Correct Answer
A) Accepting an assignment contingent on reporting a predetermined value
The Conduct section of the Ethics Rule provides that an appraiser must not agree to perform an assignment that includes the reporting of predetermined opinions and conclusions, and the Management section separately prohibits assignments or compensation contingent on reporting a predetermined result, a direction favoring the client’s cause, the amount of a value opinion, a stipulated result, or a related subsequent event. Declining an assignment for lack of competency, charging a higher fee for complex work, and taking extra time for a thorough analysis are not Ethics Rule violations.
Why This Is the Correct Answer
Option A is correct because the ETHICS RULE states that an appraiser must not agree to perform an assignment, or have a compensation arrangement, that is contingent on the reporting of a predetermined result such as an opinion of value. Accepting such an assignment compromises impartiality from the start.
Why the Other Options Are Wrong
Option B: Declining an assignment due to lack of competency
Option B, declining an assignment due to lack of competency, is what USPAP calls for when competency cannot be achieved. It is a proper response, not a violation.
Option C: Charging a higher fee for a complex assignment
Option C, charging a higher fee for a complex assignment, is a normal business decision. A fee based on the complexity of the work is not contingent on the value result.
Option D: Taking additional time beyond the deadline to complete a thorough analysis
Option D, taking additional time beyond the deadline for a thorough analysis, may be a service or contract matter, but it is not an ETHICS RULE violation. Careful work is consistent with producing credible results.
No answer before the analysis
If the value is decided before the work starts, the assignment is off limits.
How to use: Use this when an answer choice ties the assignment to a target or required value.
Exam Tip
Look for contingency on a result or value; ordinary choices about fees, time or competency are generally not ethics violations.
Common Mistakes to Avoid
- -Thinking higher fees for complex work are unethical
- -Treating declining for lack of competency as a violation
- -Believing a disclaimer allows a predetermined-value assignment
Concept Deep Dive
Analysis
This question tests recognition of predetermined-result assignments as an ETHICS RULE violation. USPAP prohibits agreeing to an assignment, or a compensation arrangement, contingent on reporting a predetermined result. The other choices describe ordinary, acceptable professional choices.
Background Knowledge
The ETHICS RULE includes Conduct, Management, Confidentiality and Nondiscrimination sections. It prohibits assignments and compensation contingent on a predetermined result, a direction favoring the client's cause, the amount of a value opinion, a stipulated result, or a related subsequent event. These bans protect the appraiser's independence.
Real-World Application
A builder offers an appraiser repeat work if she reports a value at least equal to the sales price. She declines because accepting would be agreeing to a predetermined result.
More USPAP Questions
Under USPAP, what are assignment results?
The certification required by Standards Rule 2-3 must be signed by:
Under 2024 USPAP, which statement correctly combines the requirements for an oral real property appraisal report and its workfile?
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Under 2024 USPAP Standard 1, which listed assignment element must be identified in developing a real property appraisal?
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According to USPAP, what is the primary purpose of the Ethics Rule?
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Which list gives the sections of the 2024 USPAP Ethics Rule?
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