Question:

A client has asked me to use a definition of value included in an engagement letter for the assignment.  Is this permitted?

Response:

Yes. As part of identifying the problem to be solved, the appraiser must identify the type and definition of value, but USPAP does not require the use of any specific type or definition of value. For example, in a real property appraisal assignment, Standards Rule 1-2(c) requires the appraiser to:

identify the type and definition of the value …

In addition, Standards Rules 2-2 (a)(v) and 2-2 (b)(v) require that the report:

state the type and definition of value and cite the source of the definition;

Comment: the definition of value also requires any comments needed to clearly indicate to intended users how the definition is being applied.

The source of the definition of value could be as simple as “provided in the engagement letter.” 

The requirements for identifying and reporting the definition of value are similar for personal property and business and intangible asset appraisals.