SAEE - Professional Ethics and Conduct Questions and Answers

Question 1

An appraiser is hired to value a company for a shareholder dispute.
The client, who holds a majority stake, tells the appraiser, 'I need the valuation to be as low as possible to minimize the buyout cost for the minority shareholder.' Which ethical principle is most at risk if the appraiser agrees to this request?

Accepted Answer

Impartiality and Objectivity

Answer

Confidentiality

Answer

Competency

Answer

Record Keeping

Question 2

An appraiser is performing a valuation for a company and discovers confidential, non-public information that indicates the company's financial performance will significantly decline next quarter. A close friend, who is a stockbroker, asks for 'any hot tips.' According to professional ethics, what is the appraiser's obligation regarding this information?

Accepted Answer

Maintain strict confidentiality of all non-public information obtained during the engagement.

Answer

Share the information, as it does not pertain to the final valuation number.

Answer

Disclose the information only after the valuation report is officially published.

Answer

Advise the friend to monitor public announcements about the company.

Question 3

Which of the following situations represents a potential conflict of interest that an appraiser MUST disclose to the client before accepting an assignment?

Accepted Answer

The appraiser holds a significant, direct financial interest in the company being valued.

Answer

The appraiser performed a valuation for a competitor company two years ago.

Answer

The appraiser's sibling is a low-level employee at the client's main supplier.

Answer

The appraiser attended the same university as the client's CEO.

Question 4

An appraiser is completing a valuation report. To save time, they copy a large section describing industry economic conditions from a report they wrote for a different client six months ago. The data is still reasonably current. Which ethical consideration is most relevant to this action?

Accepted Answer

Due Diligence and Competence

Answer

Advocacy

Answer

Scope of Work

Answer

Confidentiality

Question 5

An appraiser is retained by a law firm to provide a valuation in a litigation case. The lawyer tells the appraiser, 'Your job is to help us win. We need you to be a strong advocate for our client's position.' How must the appraiser respond to remain in compliance with professional ethics?

Accepted Answer

Accept the assignment but inform the lawyer that their role is to be an impartial and objective expert, not an advocate.

Answer

Agree to be an advocate, as the client is the law firm.

Answer

Refuse the assignment immediately as it is inherently unethical.

Answer

Request a higher fee to compensate for the additional requirement of advocacy.

Question 6

Under what circumstances is it generally permissible for an appraiser to disclose confidential information from an assignment without the client's consent?

Accepted Answer

When required to do so by due process of law or a state regulatory agency.

Answer

When requested by a potential buyer of the subject company.

Answer

When using the information for a case study presentation at a professional conference.

Answer

When sharing details with a colleague at another firm to get a second opinion.