BCA Professional Ethics & Standards 2 — Questions and Answers
Question 1: A BCA appraiser is asked by a client to 'find a way' to reach a predetermined value. The correct response is to:
- Attempt to justify the value using available data
- Decline the assignment and explain why (Correct answer)
- Accept if the client is a long-standing relationship
- Consult a colleague before deciding
Correct answer: Decline the assignment and explain why
Accepting an assignment with a predetermined conclusion violates USPAP's prohibition on advocacy and the BCA Code of Ethics.
Question 2: Which of the following best describes the concept of 'professional independence' in business appraisal?
- Working without supervision
- Forming opinions free from client pressure or personal interest (Correct answer)
- Choosing any methodology without client input
- Limiting communication with the client
Correct answer: Forming opinions free from client pressure or personal interest
Professional independence means the appraiser's conclusions are based solely on evidence and analysis, not external pressure.
Question 3: Under BCA ethical standards, which situation requires an appraiser to disclose a potential conflict of interest?
- Appraising a business in an industry the appraiser has studied
- Owning stock in the subject company being appraised (Correct answer)
- Using a methodology preferred by the client
- Charging a fixed fee for the assignment
Correct answer: Owning stock in the subject company being appraised
Ownership of stock in the subject company creates a financial interest that must be disclosed as a conflict of interest.
Question 4: A BCA appraiser discovers material new information after delivering the final report. The most appropriate action is to:
- Ignore it since the report is already delivered
- Notify the client and issue a corrected or supplemental report if warranted (Correct answer)
- Destroy the original report
- Inform only regulatory bodies
Correct answer: Notify the client and issue a corrected or supplemental report if warranted
Post-delivery discovery of material information requires notification to the client and potentially issuing an amended report.
Question 5: Which element is NOT required in a proper BCA appraisal report signature block?
- Date of the report
- Statement of appraiser independence
- Client's approval of the value conclusion (Correct answer)
- Appraiser's certification statement
Correct answer: Client's approval of the value conclusion
The client does not approve the value; the appraiser certifies their independent opinion, date, and compliance with standards.
Question 6: When a BCA appraiser subcontracts part of an appraisal to a specialist, the primary appraiser's responsibility is to:
- Transfer all liability to the specialist
- Accept the specialist's work without review
- Disclose the assistance and take responsibility for the final report (Correct answer)
- Require the specialist to sign as co-author only
Correct answer: Disclose the assistance and take responsibility for the final report
The primary appraiser must disclose any assistance received and remains responsible for the overall report's integrity.
Question 7: The BCA Code of Ethics requires that appraisers maintain working papers and supporting documentation for a minimum of:
- 1 year
- 3 years
- 5 years (Correct answer)
- 10 years
Correct answer: 5 years
BCA standards align with USPAP's requirement to retain workfiles for at least five years after preparation or two years after final testimony, whichever is later.
BCA Professional Ethics & Standards 2
A BCA appraiser is asked by a client to 'find a way' to reach a predetermined value.
The correct response is to: