UPDATE, March 8, 2012: We got a call this morning from the fine folks at the Appraisal Foundation asking us to remove the link to the free Gold app USPAP publication originally included in this blog, so you will not be able to click through to that. The flip book link was allowed to stay.
As many of you know, USPAP (Uniform Standards of Professional Appraisal Practice) has been updated with a new edition. The Appraisal Foundation offers a link to a USPAP “flip book,” which includes the quasi-cool sound effect of pages flipping as you “leaf” through the book. A more practical source — and the one we downloaded here at our machinery and equipment appraisal office — may be this free 2012 -2013 USPAP.pdf available for download.
Here’s what’s new for 2012-2013 USPAP:
- Changes to STANDARDS 7 & 8: PERSONAL PROPERTY APPRAISAL, DEVELOPMENT & REPORTING;
- Changes to DEFINITIONS of “Client,” “Extraordinary Assumptions,” and “Hypothetical Condition,” as well as a new definition of “Exposure Time”;
- RECORD KEEPING RULE and related edits to the ETHICS RULE;
- Revisions to Advisory Opinion 21, USPAP Compliance.
We talk about USPAP often in this blog. It’s a critical factor in any appraisal, as we pointed out not long ago when discussing Scope of Work. It’s important in particular for equipment appraisals that you suspect may end up in court or being reviewed by the IRS. In legal cases, for example, if the equipment appraisal report you submit is not USPAP compliant, the valuation option may not be admitted in court. Remember that the IRS [has] redefined “qualified appraiser” and holds to USPAP appraisal practice standards.
The Appraisal Foundation explains USPAP and its importance thusly:
The Uniform Standards of Professional Appraisal Practice (USPAP) are the generally accepted standards for professional appraisal practice in North America. USPAP contains standards for all types of appraisal services. Standards are included for real estate, personal property, business and mass appraisal.
The Financial Institutions Reform, Recovery and Enforcement Act of 1989 recognizes USPAP as the generally accepted appraisal standards and requires USPAP compliance for appraisers in federally related transactions. State Appraiser Certification and Licensing Boards; federal, state, and local agencies, appraisal services; and appraisal trade associations require compliance with USPAP.
And the American Society of Appraisers explains why all ASA appraisers, including machinery and equipment appraisers, should regularly invest in a formal USPAP course:
USPAP is reviewed and updated every two years to keep it current with changes in the marketplace. Practicing appraisers need to be cognizant of these changes … Personal Property appraisers [including MTS, aka Machinery and Equipment Appraisers] are required to take a 15-hour USPAP course and pass the exam every five years. All appraisers, however, should be looking at the changes to USPAP every other year and adjusting their practice accordingly.
Now more than ever it’s important to have an equipment and machinery appraiser who’s experienced, accredited and USPAP compliant when you need equipment appraisals for legal or tax purposes or any business situation from legal cases to property tax appeals. While I don’t expect my clients to be familiar with the new USPAP publication (with or without the page-turning sound effects!), it’s important to you, as a client, that your equipment appraiser is fully cognizant of the important updates to USPAP.
Jack Young
USPAP-compliant Machinery & Equipment Appraiser
NorCal Valuation
