Scope of Work Rule explained in teleconference, book.

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WITH THE JULY 1 INTRODUCTION OF THE 2006 USPAP AND ITS SCOPE OF WORK RULE JUST WEEKS AWAY, APPRAISERS AND THE BANKING COMMUNITY ARE STILL SEEKING OUT INFORMATION ON HOW THE NEW RULE WILL AFFECT THEM.

A recent teleconference hosted by the American Bankers Association and the Appraisal Institute, "Scope of Work: Burden or Blessing," walked attendees through key aspects of the new USPAP rule. Speakers at the April 25 event included Gregory Accetta, chair of The Appraisal Foundation's Appraisal Standards Committee; Stephanie Coleman, MAI, SRA, the Appraisal Institute's Director of Screening; and Donald Damron, MAI, senior vice president and chief appraiser for KeyBank.

Emphasizing that scope of work does not change the appraiser's obligations in the development process, Accetta pointed out that the scope of work decision drives the full range of activities prior to communicating the results. "Reporting is not part of scope of work," he stated. Included in scope of work are such items as the extent to which the property is identified and inspected, the type and extent of data researched, and the type and extent of analyses applied to arrive at opinions or conclusions.

Scope of work now replaces the Departure Rule, which Coleman said oftentimes created confusion among both appraisers and their clients. "Departure was misunderstood," as was the term "limited appraisal," she said. The "departure of Departure" allows appraisers to focus on services rather than on the report, she emphasized.

In answering a question about whether a client can guide the appraiser regarding scope of work, both Accetta and Coleman agreed that this was possible. In the example cited, which pertained to use of the cost approach, Accetta commented that it was ultimately up to the appraiser to decide how much weight or relevance to put on the approach. Coleman pointed out that the client may only be looking for certain elements of the approach (e.g., replacement or reproduction cost) and could have the appraiser address such matters. If it's material to the client, she said, the appraiser should address it in the report.

Scope of work is an ongoing process throughout the assignment, Accetta indicated. As information or conditions are discovered during the course of an assignment, the appraiser might reconsider the scope of work.

Although the Departure Rule and the terms "complete" and "limited" appraisal have been deleted from USPAP, no change has occurred regarding the...

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