USPAP 2008–2009
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Each written appraisal report for an interest in a business enterprise or intangible asset must be prepared in accordance with one of the following options and prominently state which option is used: Appraisal Report or Restricted Use Appraisal Report.
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Comment: When the intended users include parties other than the client, an Appraisal Report must be provided. When the intended users do not include parties other than the client, a Restricted Use Appraisal Report may be provided.
The essential difference between these options is in the content and level of information provided. The appropriate reporting option and the level of information necessary in the report are dependent on the intended use and intended users.
An appraiser must use care when characterizing the type of report and level of information communicated upon completion of an assignment. An appraiser may use any other label in addition to, but not in place of, the label set forth in this Standard for the type of report provided.
The report content and level of information requirements set forth in this Standard are minimums for both types of report.
A party receiving a copy of an Appraisal Report or Restricted Use Appraisal Report does not become an intended user of the appraisal unless the appraiser identifies such party as an intended user as part of the assignment.
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(a) |
The content of an Appraisal Report must be consistent with the intended use of the appraisal and, at a minimum:
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(i) |
state the identity of the client and any other intended users, by name or type;(note113)
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Comment: An appraiser must use care when identifying the client to ensure a clear understanding and to avoid violations of the Confidentiality section of the ETHICS RULE. In those rare instances when the client wishes to remain anonymous, an appraiser must still document the identity of the client in the workfile but may omit the client’s identity in the report.
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(ii) |
state the intended use of the appraisal;(note114)
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(iii) |
summarize information sufficient to identify the business or intangible asset and the interest appraised;
Comment: The identification information must include property characteristics relevant to the type and definition of value and intended use of the appraisal.
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(iv) |
state the extent to which the interest appraised contains elements of ownership control, including the basis for that determination;
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(v) |
state the extent to which the interest appraised lacks elements of marketability and/or liquidity, including the basis for that determination;
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(vi) |
state the standard (type) and definition of value and the premise of value and cite the source of the definition;
Comment: Stating the definition of value also requires any comments needed to clearly indicate to the intended users how the definition is being applied.
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(vii) |
state the effective date of the appraisal and the date of the report;
Comment: The effective date of the appraisal establishes the context for the value opinion, while the date of the report indicates whether the perspective of the appraiser on the market or property as of the effective date of the appraisal was prospective, current, or retrospective.
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(viii) |
summarize the scope of work used to develop the appraisal;(note115)
Comment: Because intended users’ reliance on an appraisal may be affected by the scope of work, the report must enable them to be properly informed and not misled. Sufficient information includes disclosure of research and analyses performed and might also include disclosure of research and analyses not performed.
When any portion of the work involves significant business and/or intangible asset appraisal assistance, the appraiser must summarize the extent of that assistance. The signing appraiser must also state the name(s) of those providing the significant business and/or intangible asset appraisal assistance in the certification, in accordance with Standards Rule 10-3.(note116)
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(ix) |
summarize the information analyzed, the appraisal procedures followed, and the reasoning that supports the analyses, opinions, and conclusions; exclusion of the market approach, asset-based (cost) approach, or income approach must be explained;
Comment: An Appraisal Report must include sufficient information to indicate that the appraiser complied with the requirements of STANDARD 9. The amount of detail required will vary with the significance of the information to the appraisal.
The appraiser must provide sufficient information to enable the client and intended users to understand the rationale for the opinions and conclusions, including reconciliation in accordance with Standards Rule 9-5.
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(x) |
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(xi) |
include a signed certification in accordance with Standards Rule 10-3.
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(b) |
The content of a Restricted Use Appraisal Report must be consistent with the intended use of the appraisal and, at a minimum: |
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(i) |
state the identity of the client, by name or type;(note117) and state a prominent use restriction that limits use of the report to the client and warns that the appraiser’s opinions and conclusions set forth in the report may not be understood properly without additional information in the appraiser’s workfile;
Comment: An appraiser must use care when identifying the client to ensure a clear understanding and to avoid violations of the Confidentiality section of the ETHICS RULE. In those rare instances when the client wishes to remain anonymous, an appraiser must still document the identity of the client in the workfile but may omit the client’s identity in the report.
The Restricted Use Appraisal Report is for client use only. Before entering into an agreement, the appraiser should establish with the client the situations where this type of report is to be used and should ensure that the client understands the restricted utility of the Restricted Use Appraisal Report.
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(ii) |
state the intended use of the appraisal;(note118)
Comment: The intended use of the appraisal must be consistent with the limitation on use of the Restricted Use Appraisal Report option in this Standards Rule (i.e. client use only).
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(iii) |
state information sufficient to identify the business or intangible asset and the interest appraised;
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Comment: The identification information must include property characteristics relevant to the type and definition of value and intended use of the appraisal.
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(iv) |
state the extent to which the interest appraised contains elements of ownership control, including the basis for that determination;
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(v) |
state the extent to which the interest appraised lacks elements of marketability and/or liquidity, including the basis for that determination;
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(vi) |
state the standard (type) of value and the premise of value, and cite the source of its definition;
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(vii) |
state the effective date of the appraisal and the date of the report;
Comment: The effective date of the appraisal establishes the context for the value opinion, while the date of the report indicates whether the perspective of the appraiser on the market or property as of the effective date of the appraisal was prospective, current, or retrospective.
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(viii) |
state the scope of work used to develop the appraisal;(note119)
Comment: Because the client’s reliance on an appraisal may be affected by the scope of work, the report must enable them to be properly informed and not misled. Sufficient information includes disclosure of research and analyses performed and might also include disclosure of research and analyses not performed.
When any portion of the work involves significant business and/or intangible asset appraisal assistance, the appraiser must state the extent of that assistance. The signing appraiser must also state the name(s) of those providing the significant business and/or intangible asset appraisal assistance in the certification, in accordance with SR 10-3.(note120)
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(ix) |
state the appraisal procedures followed, state the value opinion(s) and conclusion(s) reached, and reference the workfile; exclusion of the market approach, asset-based (cost) approach, or income approach must be explained;
Comment: An appraiser must maintain a specific, coherent workfile in support of a Restricted Use Appraisal Report. The contents of the workfile must include sufficient information to indicate that the appraiser complied with the requirements of STANDARD 9 and for the appraiser to produce an Appraisal Report. The file must be available for inspection by the client (or the client’s representatives, such as those engaged to complete an appraisal review), such third parties as may be authorized by due process of law, and a duly authorized professional peer review committee except when such disclosure to a committee would violate applicable law or regulation.
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(x) |
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(xi) |
include a signed certification in accordance with Standards Rule 10-3. |
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USPAP 2008–2009 Edition
©The Appraisal Foundation