ARA Professional Standards & Competencies 3 — Questions and Answers
Question 1: The ASFMRA Code of Ethics requires members to avoid actions that could be construed as:
- Innovative valuation methodology
- Misrepresentation, fraud, or deception in professional services (Correct answer)
- Accepting agricultural appraisal assignments only
- Using the income approach for farm properties
Correct answer: Misrepresentation, fraud, or deception in professional services
ASFMRA's Code of Ethics prohibits misrepresentation, fraud, and deceptive practices to protect the integrity of rural valuation professionals.
Question 2: When appraising a property for a federally related transaction, rural appraisers must comply with:
- Only state licensing requirements
- USPAP and FIRREA requirements (Correct answer)
- Only the client's internal guidelines
- International Valuation Standards (IVS)
Correct answer: USPAP and FIRREA requirements
FIRREA (Financial Institutions Reform, Recovery, and Enforcement Act) requires that appraisals for federally related transactions comply with USPAP.
Question 3: An appraiser signs a certification in an appraisal report stating they have no bias regarding the property. What USPAP rule is this certification tied to?
- Competency Rule
- Ethics Rule — Independence section (Correct answer)
- Record Keeping Rule
- Scope of Work Rule
Correct answer: Ethics Rule — Independence section
USPAP requires appraisers to certify their independence, impartiality, and objectivity through signed certifications in each report.
Question 4: A rural appraiser's workfile must be retained for a minimum of how many years after the date of the report or the date of the last appraiser-client contact, whichever is later?
- 2 years
- 3 years
- 5 years (Correct answer)
- 7 years
Correct answer: 5 years
USPAP's Record Keeping Rule requires a minimum five-year retention period for appraisal workfiles.
Question 5: Which of the following best describes 'extraordinary assumptions' in a USPAP-compliant appraisal?
- Assumptions that are always true regardless of circumstances
- Assumptions that, if found false, could alter the appraiser's opinions or conclusions (Correct answer)
- Assumptions required by the client to reach a higher value
- Assumptions used only in restricted appraisal reports
Correct answer: Assumptions that, if found false, could alter the appraiser's opinions or conclusions
Extraordinary assumptions are uncertain facts that, if proved false, could change the appraiser's value opinion and must be disclosed in the report.
Question 6: In rural appraisal practice, 'hypothetical conditions' differ from 'extraordinary assumptions' primarily because hypothetical conditions:
- Are always more conservative than extraordinary assumptions
- Are contrary to known facts but used for analytic purposes (Correct answer)
- Are required by FIRREA for agricultural appraisals
- Cannot be used in Appraisal Reports
Correct answer: Are contrary to known facts but used for analytic purposes
Hypothetical conditions are known to be contrary to fact (e.g., appraising as if a proposed improvement is complete) and are used for specific analytic purposes.
Question 7: An ARA member who publicly claims expertise in a specialty they do not possess would violate which professional standard?
- USPAP Competency Rule and ASFMRA Code of Ethics (Correct answer)
- Only the ASFMRA Code of Ethics
- Only USPAP Standards Rules 1 and 2
- FIRREA regulations only
Correct answer: USPAP Competency Rule and ASFMRA Code of Ethics
Falsely claiming expertise violates both USPAP's requirement for honesty and the ASFMRA Code of Ethics prohibition on misrepresentation.
ARA Professional Standards & Competencies 3
The ASFMRA Code of Ethics requires members to avoid actions that could be construed as: