BCA Professional Ethics & Standards 3 — Questions and Answers
Question 1: A BCA appraiser is hired by opposing counsel in a litigation matter. Which disclosure obligation applies?
- No disclosure is needed since litigation roles are understood
- The appraiser must disclose the litigation context in the report (Correct answer)
- The appraiser must disclose only if value exceeds $1 million
- Disclosure is optional but recommended
Correct answer: The appraiser must disclose the litigation context in the report
USPAP and BCA standards require disclosure of the intended use and client identity, including litigation contexts, in the appraisal report.
Question 2: Which of the following fee arrangements is considered ethical under BCA standards?
- A fee contingent on the appraised value
- A flat fee regardless of the final value conclusion (Correct answer)
- A bonus paid if the value exceeds a threshold
- A fee tied to the transaction closing
Correct answer: A flat fee regardless of the final value conclusion
Flat or hourly fees are ethical; contingency fees tied to the value conclusion compromise appraiser independence.
Question 3: The duty of confidentiality in business appraisal means an appraiser may NOT:
- Use aggregate industry data in the report
- Discuss the assignment with the client
- Share client information with a competitor without consent (Correct answer)
- Review comparable transaction data
Correct answer: Share client information with a competitor without consent
Confidential client information cannot be disclosed to third parties, including competitors, without the client's consent.
Question 4: When a BCA appraiser updates a prior appraisal, the update must:
- Simply change the date on the original report
- Be treated as a new assignment with full compliance with current standards (Correct answer)
- Reference only the original methodology without re-analysis
- Require no new certification
Correct answer: Be treated as a new assignment with full compliance with current standards
An update is a new appraisal assignment and must comply with current standards, including a new certification and effective date.
Question 5: A BCA appraiser who also serves as a business broker for the same transaction is:
- Permitted if the client consents in writing
- Never permitted regardless of consent (Correct answer)
- Permitted if the fee is disclosed
- Permitted only in non-litigation contexts
Correct answer: Never permitted regardless of consent
Serving simultaneously as appraiser and broker on the same transaction creates an irreconcilable conflict of interest.
Question 6: Under BCA ethical standards, the appraiser's certification must include a statement that:
- The client agrees with the value conclusion
- The appraiser has no undisclosed material interests in the subject (Correct answer)
- The report will not be used in court
- The appraiser holds no professional credentials
Correct answer: The appraiser has no undisclosed material interests in the subject
The certification must affirm that the appraiser has no undisclosed material interest and that the opinion is unbiased.
Question 7: Which scenario best illustrates a violation of the BCA's 'scope of work' standards?
- Using the income approach when applicable
- Omitting a material valuation approach without explanation (Correct answer)
- Consulting industry databases for comparables
- Reviewing audited financial statements
Correct answer: Omitting a material valuation approach without explanation
Omitting a relevant approach without explaining why it was excluded violates the scope of work rule requiring sufficient analysis.
BCA Professional Ethics & Standards 3
A BCA appraiser is hired by opposing counsel in a litigation matter.
Which disclosure obligation applies?