Ethics Standards & Legal Compliance Flashcards
7 cards from real CGA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Ethics Standards & Legal Compliance flashcards as text
A gemologist appraiser discovers that a client's diamond has been fracture-filled, but the client insists it was sold to them as untreated. What is the appraiser's ethical obligation?
Answer: Disclose the fracture-filling in the appraisal report regardless of the client's claims
Appraisers must disclose all known treatments in their reports to ensure accuracy and protect all parties relying on the document.
Under the Uniform Standards of Professional Appraisal Practice (USPAP), which of the following constitutes a conflict of interest that must be disclosed?
Answer: Appraising jewelry owned by a family member without disclosure
USPAP requires appraisers to disclose any personal interest or bias, including familial relationships with the property owner.
Which federal law most directly regulates the sale of gemstones and jewelry through interstate commerce in the United States?
Answer: The Federal Trade Commission Act
The Federal Trade Commission Act and FTC Jewelry Guides govern truthful representation of gemstones in interstate commerce.
A CGA receives a contingency fee offer where payment depends on achieving a minimum appraised value. What should the appraiser do?
Answer: Decline, as contingency fees based on appraised value are ethically prohibited
Contingency fees tied to appraised value compromise objectivity and are prohibited under professional appraisal ethics standards.
What is the primary purpose of the FTC's Jewelry Guides as they relate to gemstone appraisers?
Answer: To ensure truthful and non-deceptive descriptions of gemstones in commerce
The FTC Jewelry Guides are designed to prevent deceptive practices in the description and marketing of jewelry and gemstones.
An appraiser is asked to provide a 'quick verbal estimate' of a gem's value for a client in a hurry. Ethically, the appraiser should:
Answer: Clarify that verbal estimates are not formal appraisals and should not be used for insurance or legal purposes
Appraisers must ensure clients understand that informal verbal estimates lack the rigor and documentation of a formal appraisal and should not be relied upon for significant decisions.
Which record-keeping practice is required by USPAP for appraisal workfiles?
Answer: Workfiles must be retained for a minimum of 5 years or 2 years after final disposition of legal proceedings
USPAP mandates that appraisers retain workfiles for at least five years after preparation or two years after final disposition of any judicial proceeding, whichever is longer.