Ethics Standards & Legal Compliance Flashcards

What is the ethical significance of maintaining a separation between an appraiser's role as a buyer/seller and their role as an appraiser?

Answer: It prevents conflicts of interest that could compromise the objectivity of valuations

Combining buying/selling with appraising creates financial conflicts of interest that can bias valuations and undermine client trust.

According to FTC guidelines, when must a gemstone's country of origin be disclosed in a sales or appraisal context?

Answer: When it is a material fact that influences consumer purchasing decisions or value

The FTC requires disclosure of material facts that affect consumer decisions, and origin can be a material factor that significantly influences a gemstone's value and desirability.

A CGA receives a subpoena to testify as an expert witness about a gem they previously appraised. Their primary ethical obligation is to:

Answer: Provide honest, objective testimony based on their professional findings

Expert witnesses have a duty to the court to provide honest and objective testimony, which supersedes loyalty to any party in the proceeding.

Which practice violates the ethical standard of 'independence' for a gemstone appraiser?

Answer: Allowing a client's lender to review the appraisal methodology before completion

Allowing an interested party such as a lender to influence the appraisal methodology before completion compromises the appraiser's independence.

Under USPAP, when must an appraiser update or readdress a prior appraisal if market conditions have significantly changed?

Answer: When a client or intended user relies on the prior appraisal for a new transaction or purpose

When market conditions change significantly and a client intends to use a prior appraisal for a new purpose, the appraiser should update or issue a new appraisal to reflect current conditions.

Which of the following actions by a CGA would most likely constitute a violation of anti-trust laws?

Answer: Coordinating with other local appraisers to set minimum fee schedules

Price-fixing agreements among competitors, including setting minimum fees collectively, violate antitrust laws such as the Sherman Antitrust Act.

A client requests that their appraisal report omit mention of a known chip on the gem to avoid reducing its insured value. The appraiser should:

Answer: Include all known defects and refuse to omit material facts from the report

Omitting known defects from an appraisal report is a form of misrepresentation that exposes the appraiser to legal liability and violates professional ethics standards.