CAA Appraisal Standards and Ethics 2 — Questions and Answers
Question 1: Under USPAP, how long must an appraiser retain the workfile for a vehicle appraisal not involved in litigation?
- At least 2 years after preparation
- At least 3 years after preparation
- At least 5 years after preparation (Correct answer)
- At least 7 years after preparation
Correct answer: At least 5 years after preparation
The Record Keeping Rule requires retaining a workfile for at least five years after preparation, or two years after final disposition of any judicial proceeding in which testimony was given, whichever is later.
Question 2: Which USPAP standards specifically govern the development and reporting of personal property appraisals such as motor vehicles?
- Standards 1 and 2
- Standards 3 and 4
- Standards 7 and 8 (Correct answer)
- Standards 9 and 10
Correct answer: Standards 7 and 8
Standards 7 and 8 address personal property appraisal development and reporting, which includes vehicles.
Question 3: An insurer offers to pay an appraiser a bonus if the appraised value of a total-loss vehicle comes in below a target amount. What should the appraiser do?
- Accept if the bonus is disclosed in the report
- Decline, because compensation contingent on a predetermined result is prohibited (Correct answer)
- Accept only if the target value seems reasonable
- Accept but use a Restricted Appraisal Report
Correct answer: Decline, because compensation contingent on a predetermined result is prohibited
The Ethics Rule prohibits accepting compensation contingent on reporting a predetermined result or a direction in value that favors the client.
Question 4: Within what period must an appraiser disclose prior services regarding the same vehicle to a new client?
- 12 months
- 24 months
- Three years (Correct answer)
- Five years
Correct answer: Three years
USPAP requires disclosure of any services performed regarding the subject property within the three years prior to accepting the assignment.
Question 5: An appraiser is asked to value a vehicle assuming repairs that have not yet been made are completed. This assumption is best classified as:
- An extraordinary assumption
- A hypothetical condition (Correct answer)
- A jurisdictional exception
- A limiting condition only
Correct answer: A hypothetical condition
A hypothetical condition is contrary to what is known to exist on the effective date but is assumed for the purpose of analysis.
Question 6: Which USPAP rule allows an appraiser to disregard a part of USPAP when a law or regulation in a jurisdiction precludes compliance?
- Competency Rule
- Scope of Work Rule
- Jurisdictional Exception Rule (Correct answer)
- Ethics Rule
Correct answer: Jurisdictional Exception Rule
The Jurisdictional Exception Rule applies when law or regulation precludes compliance with part of USPAP, and only that part is voided.
Question 7: Who is the 'client' in a USPAP-compliant vehicle appraisal assignment?
- Anyone who receives a copy of the report
- The party or parties who engage the appraiser in the assignment (Correct answer)
- The registered owner of the vehicle
- The lender holding the title
Correct answer: The party or parties who engage the appraiser in the assignment
USPAP defines the client as the party or parties who engage, by employment or contract, the appraiser in a specific assignment.
CAA Appraisal Standards and Ethics 2
Under USPAP, how long must an appraiser retain the workfile for a vehicle appraisal not involved in litigation?