Present Value LLC » USPAP

The Appraisal Foundation Releases the 2012-2013 Edition of USPAP

admin — Tue, 18 Oct 2011 19:02:27 +0000

The Appraisal Foundation, a congressionally authorized non-profit organization dedicated to the advancement of professional valuation, announced that it has released the 2012-2013 edition of the Uniform Standards of Professional Appraisal Practice (USPAP). USPAP is the generally accepted standards of practice for the appraisal profession in the United States.

The 2012-2013 edition of USPAP is valid for two years, effective January 1, 2012, through December 31, 2013. As with the prior edition, the new edition includes the standards of professional practice for all appraisal disciplines as well as guidance from the Appraisal Standards Board (ASB) in the form of USPAP Advisory Opinions and USPAP Frequently Asked Questions (FAQs).

Some of the changes to the 2012-2013 edition of USPAP include:

Revisions to DEFINITIONS of “Client,” “Extraordinary Assumptions,” and “Hypothetical Condition,” as well as a new definition of “Exposure Time”;
Creation of a new RECORD KEEPING RULE and related edits to the Conduct Section of the ETHICS RULE;
Revisions to Advisory Opinion 21, USPAP Compliance; and,
Revisions to STANDARDS 7 & 8: PERSONAL PROPERTY APPRAISAL, DEVELOPMENT & REPORTING.

The Appraisal Foundation is encouraging appraisers to familiarize themselves with the changes now, prior to January 1, 2012. Earlier this summer, the Appraisal Foundation released a video featuring the Chair and Vice-Chair of the ASB discussing the changes to USPAP. The video, A Preview of Changes to the 2012-13 Uniform Standards of Professional Appraisal Practice (USPAP), is a 23-minute interview with the 2011 Chair and Vice-Chair of the Appraisal Standards Board, J. Carl Schultz, Jr. and Barry Shea.

For more information, you can visit the Appraisal Foundation website: http://www.appraisalfoundation.org/.

Present Value LLC is a worldwide international appraisal and advisory company that provides a range of professional services such as Certified Machinery and Equipment Appraisals, Inventory Appraisals, Asset Verification Services, Business Valuations, and Real Estate Appraisals. Contact us today!

By: Present Value

Additional Reading

The Appraisal Foundation Releases Fourth Exposure Draft of proposed changes for the 2012-2013 Edition of USPAP

The 7-Step Scope of Work for a Typical Machinery and Equipment Appraisal

Three Things to Think About When Engaging a Machinery and Equipment Appraiser

Appraisal Subcommittee to Study the Establishment of a National Appraisal Complaint Hotline as Required by Dodd-Frank Act

admin — Fri, 11 Mar 2011 02:45:37 +0000

As part of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which was put into effect last July, a National Appraisal Complaint Hotline was supposed to be put into place within six months after the date of enactment, if such a hotline didn’t exist.

The Act required that the Appraisal Subcommittee (ASC) of the Federal Financial Institutions Examination Council determine whether there is a national appraisal complaint hotline to receive complaints of noncompliance with appraisal independence standards and the Uniform Standards of Professional Appraisal Practice (USPAP).

According to the Act: “The hotline is expected to have the capability to receive complaints from appraisers, individuals, or other entities concerning the improper influencing or attempted improper influencing of appraisers or the appraisal process.”

On January 19, 2011, in a press release, the ASC said it had determined that an appraisal complaint hotline as prescribed in the Dodd-Frank Act was not currently in operation. The ASC agencies do have processes in place to respond to inquiries, but there is no one hotline that fully complies with the Act. In the press release, the ASC said in compliance with the Act’s mandate “it will study the establishment and operation of a national appraisal complaint hotline that can receive complaints, refer complaints to the appropriate federal or state agency, and facilitate the monitoring and resolution of complaints.”

Present Value LLC is a worldwide international appraisal and advisory company that provides a range of professional services such as Certified Machinery and Equipment Appraisals, Inventory Appraisals, Asset Verification Services, Business Valuations, and Real Estate Appraisals. Contact us today!

By: Present Value

Additional Reading

Appraisal Institute Releases FAQ on Dodd-Frank Financial Reform Law

The Dodd-Frank Wall Street Reform and Consumer Protection Act

Much Rejoicing as Financial Reform Bill Passes

The Appraisal Foundation Releases Fourth Exposure Draft of proposed changes for the 2012-2013 Edition of USPAP

admin — Fri, 17 Dec 2010 02:24:49 +0000

On December 10, 2010, The Appraisal Foundation’s Appraisal Standards Board (ASB) released the fourth exposure draft of proposed changes for the 2012-2013 edition of the Uniform Standards of Professional Appraisal Practice (USPAP), and requests public comment.

The goal of USPAP is to promote and maintain a high level of public trust in appraisal practice by establishing requirements for appraisers. With this goal in mind, the Appraisal Standards Board (ASB) regularly solicits and receives comments and suggestions for improving USPAP. Proposed changes are intended to improve USPAP understanding and enforcement, and thereby achieve the goal of promoting and maintaining public trust in appraisal practice.

The proposed changes include:

Revisions to DEFINITIONS of “Client,” “Extraordinary Assumption,” and “Hypothetical Condition”
Required Labeling of Hypothetical Conditions
Revisions Relating to Development and Disclosure of Exposure Time Opinion
Revisions to Standards Rules 2-3, 3-6, 6-9, 8-3 and 10-3
Retirement of STANDARDS 4 and 5
RECORD KEEPING RULE and Related Edits to the Conduct Section of the ETHICS RULE
Revisions to Advisory Opinion 21, USPAP Compliance
Revisions to STANDARD 7: PERSONAL PROPERTY APPRAISAL, DEVELOPMENT

Click here to read the full exposure draft. The ASB is encouraging comments in writing before the January 14, 2011 deadline. There will also be an ASB public meeting on January 21, 2011, in Scottsdale, AZ to discuss the proposed changes further.

By: Present Value

Additional Reading

Certified Machinery and Equipment Appraisers: Present Value

New USPAP Changes Effective January 1, 2010

The Appraisal Foundation Announces 2010-2011 Edition of USPAP

Who Needs a Certified Machinery and Equipment Appraisal? Part 2

admin — Thu, 23 Sep 2010 15:00:05 +0000

We have discussed in numerous posts reasons why you should always rely on a certified machinery and equipment appraiser (CMEA). To reduce your risk of liability, you should be sure that the appraisal is conducted by a certified professional. CMEAs meet all government training requirements, and will provide appraisal reports that are USPAP compliant and will stand up to scrutiny in a court of law. In our last post, we covered two groups of business professionals that should always rely on CMEAs when it becomes necessary to know the value of any machinery and equipment. Here are two more.

Business Owners and CMEAs

Business owners might need to engage a CMEA for a number of reasons. If they’re selling equipment, they need to make sure they are not selling too low or pricing their machinery and equipment above the fair market value. And, if their equipment or machinery is to be used as part of their overall business valuation, their values need to be substantiated in order for the business valuation to be as accurate as possible.

Lenders and CMEAs

As a result of a shaky lending market, bankers and lenders are using new ways to reduce their liability when making loans. Lending decisions now often are based on the value of collateral a business has, including machinery or equipment. One of the best ways they can protect themselves is by relying on a CMEA. They need to know the fair market, orderly liquidation, and forced liquidation values of the equipment, which become important in the event of a loan default.

Present Value LLC is a nationwide appraisal and advisory company that provides a range of professional services such as Certified Machinery and Equipment Appraisals, Inventory Appraisals, Asset Verification Services, Business Valuations, and Real Estate Appraisals. Contact us today!

By: Present Value

Additional Reading:

Who Needs a Certified Machinery and Equipment Appraisal? Part 1

Three Things to Think About When Engaging a Machinery and Equipment Appraiser

The 7-Step Scope of Work for a Typical Machinery and Equipment Appraisal

The Importance of an Unbiased Third-Party Opinion

Who Needs a Certified Machinery and Equipment Appraisal? Part 1

admin — Tue, 21 Sep 2010 20:31:06 +0000

We have discussed in numerous posts reasons why you should always rely on a certified machinery and equipment appraiser (CMEA). To reduce your risk of liability, you should be sure that the appraisal is conducted by a certified professional. CMEAs meet all government training requirements, and will provide appraisal reports that are USPAP compliant and will stand up to scrutiny in a court of law. Below are two groups of business professionals that should always rely on CMEAs when it becomes necessary to know the value of any machinery and equipment.

Accountants and CMEAs

Quality accountants should act in the best interest their clients, and the best thing they can do is to make sure that they are compliant with laws and best practices when dealing with the IRS. If an accountant does not rely on a certified machinery and equipment appraisal to determine the value of a piece of equipment, he or she is putting clients at a significant risk. Oftentimes, the IRS will not accept the value of a piece of equipment that is not substantiated.

Here are situations in which accountants should always secure a certified machinery or equipment appraisal to avoid penalties and help eliminate risk of liability for their clients:

Converting from C Corp to S Corp
1031 Exchanges
Gifting
Sarbanes-Oxley Compliance
Determining Property Taxes

Attorneys and CMEAs

For attorneys who work on cases that involve the value of a business’s physical assets, like machinery and equipment, it is risky to rely on the outdated client estimates, depreciation schedules, or guess at value rather than rely on a certified machinery and equipment appraisal. Attorneys need to make sure that appraisals will hold up to scrutiny with the IRS, courts, or lenders. This is also important in the following situations:

Loans / Leases • Property Taxes • Insurable Value
Divorce • Converting from C to S Corp • Cost Segregations
Taxes • 1031 Exchanges • Trust Agreements
Buy / Sell Agreements • Estate Planning • Bankruptcy
Retirement Planning • Partnership Dissolution • Strategic Planning
Litigation Support • GASB 34 • Sarbanes-Oxley
Collateral • Gifting

By: Present Value

Additional Reading:

Three Things to Think About When Engaging a Machinery and Equipment Appraiser

The 7-Step Scope of Work for a Typical Machinery and Equipment Appraisal

The Importance of an Unbiased Third-Party Opinion

Three Things to Think About When Engaging a Machinery and Equipment Appraiser

admin — Thu, 09 Sep 2010 23:16:11 +0000

An error in a machinery and equipment appraisal can be costly. You should have confidence that the appraisal values are accurate and are backed by evidence to support the fair market value, fair value, orderly liquidation value, or forced liquidation value. These three factors can help ensure that your machinery and equipment appraisal report will hold up under scrutiny.

1. Certification – Make sure that the appraiser you choose has a professional designation to prepare and submit an equipment appraisal – a Certified Machinery and Equipment Appraiser (CMEA). Ask for a copy of his/her qualifications and evidence of professionalism and experience in machinery and equipment appraisals. Then you know you can rely on a trained professional who is experienced in the ethics and reporting guidelines of Uniform Standards of Professional Appraisal Practice (USPAP). Only the skills of a CMEA professional make sound financial business sense in determining an accurate value. Oftentimes, a non-certified equipment appraisal will not be accepted by governing authorities or withstand scrutiny.

2. Code of Ethics – Make sure that your appraiser complies with the Ethics Rule of the Uniform Standards of Professional Appraisal Practice. A CMEA is required to observe the highest standards of professional ethics and comply with regulations mandated by USPAP. CMEAs should promote and preserve the public trust inherent in professional appraisal practice.

3. Certified Machinery and Equipment Appraisal Report – Know what you can expect to see in a qualified equipment appraisal prepared by a certified machinery and equipment appraiser. A CMEA’s comprehensive and detailed appraisal report normally includes photographs, model numbers, serial numbers, and other descriptive information. Values are based on extensive research, personal inspection, and contact with manufacturers and suppliers to determine what machinery and equipment is really worth. A CMEA’s machinery and equipment appraisals are performed to standards set by the requirements of the USPAP. A CMEA stands behind the Certified Appraisal Report. That’s why it withstands scrutiny by financial institutions, CPAs, courts, and others.

By: Present Value

Additional Reading

The 7-Step Scope of Work for a Typical Machinery and Equipment Appraisal

What’s It Worth

Certified Machinery and Equipment Appraisal

The 7-Step Scope of Work for a Typical Machinery and Equipment Appraisal

admin — Fri, 20 Aug 2010 02:09:45 +0000

As part of a typical machinery and equipment appraisal, the appraiser will outline the scope of work involved in an assignment. The USPAP (Uniform Standards of Professional Appraisal Practice) has put forth guidelines that machinery and equipment appraisers should include in the scope of work. The minimum standards for scope of work include the expectations of the client and other users and the actions of other appraisers who carry out similar assignments.

When you engage an appraiser, these are the steps that an appraiser typically will take prior to determining the value of your machinery and equipment:

Identify the assets to be appraised
Define the purpose of the appraisal
Establish the valuation date for the appraisal
Determine the appropriate valuation concepts and approaches to be used
Determine the type of valuation study to be completed
Select the type of appraisal report to be provided
Check the availability of data and information

The scope of work is the first step in any appraisal. Without a specific scope of work, the conclusions of an appraisal may not stand up to scrutiny.

By: Present Value

Additional Reading:

Certified Machinery and Equipment Appraisers: Present Value

Certified Machinery and Equipment Appraisal

What’s It Worth?

Certified Machinery and Equipment Appraisers: Present Value

admin — Thu, 08 Jul 2010 19:27:07 +0000

Present Value has performed an extensive number of machinery and equipment appraisals worldwide. A certified machinery and equipment appraisal is compliant with USPAP standards and the standards of the National Equipment & Business Builders Institute.

Whether you need to know the fair market value, orderly liquidation value, and/or forced liquidation value of your equipment, the professionals at Present Value can provide you with a certified equipment appraisal report in a timely manner at a competitive cost. Our certified equipment appraisals will meet the requirements of financial institutions, government agencies, buyers and sellers, shareholders, and partners. Our experience and expertise extends across all machinery, equipment, and technical specialties. Below are examples of some of the industries in which we specialize:

Health Care and Medical Industry – Examples of equipment appraised: MRI Imaging Systems, CT Scans, Ultrasound Equipment, Dental Offices, Nursing Homes, Hospital Equipment, Cardiovascular, Ophthalmology, Nuclear Imaging, Orthopedics, Surgical Centers, EP Systems, Physical Therapy Clinics, X-Ray Machines, Advanced PET Systems, PACS Systems, and more.

Manufacturing Industry – Examples of equipment appraised: Plastics Manufacturing, Machine Shops, Woodworking Equipment, Agriculture Equipment, Routers, Sanders, CNC Equipment, Lathes, Conveyers, Air Compressors, Industrial Tanks, Brake Presses, Extruders, Saws, Planners, Vacuum Pumps, Drill Presses, Benders, Die Cutters, Saws, Molds, Tooling, Cutters, and more.

Heavy Equipment and Construction Industry – Examples of equipment appraised: All Yellow Iron, Excavators, Compressors, Stackers, Aerial Lifts, Crushers, Spreaders, Backhoes, Cranes, Dozers, Rigging Equipment, Skid Loaders, Shop Equipment, Oil Field Equipment, Asphalt Plants, Washing Equipment, Incinerators, Drilling Equipment, Generators, Railroad Equipment, Tractors, Trucks, Trailers, Environmental and Recycling Equipment, Sweepers, Soil Stabilization Equipment, Aggregate Equipment, and more.

By: Present Value

Additional reading:

Certified Machinery and Equipment Appraisal

Businesses Appraised by CMEAs

New USPAP Changes Effective January 1, 2010

admin — Tue, 22 Dec 2009 20:16:29 +0000

As we discussed in a post in June, The Appraisal Foundation, a congressionally authorized non-profit organization that fosters professionalism among appraisers by setting qualifications and standards, announced that its Appraisal Standards Board (ASB) adopted revisions for the 2010-2011 edition of the Uniform Standards of Professional Appraisal Practice (USPAP). USPAP are the generally accepted performance and ethical standards for the appraisal profession in the United States. Standards are included for real estate, personal property, business, and mass appraisal. And, these changes go into effect on January 1, 2010.

The Appraisal Foundation has issued a question and answer document that is designed to help answer any questions that might arise. You can visit their website to learn more about all of the changes.

In particular, they have highlighted one revision to USPAP that will affect each assignment starting in 2010. Appraisers will be required to disclose to their client, prior to engagement and in the certification of appraisal reports, “any services regarding the subject property performed by the appraiser within the prior three years, as an appraiser or in any other capacity.”

As always, Present Value is USPAP compliant.

By: Present Value

Scope of Work

admin — Thu, 22 Oct 2009 22:59:04 +0000

The USPAP (Uniform Standards of Professional Appraisal Practice) has always required that real estate appraisers show the scope of work required for credible results. But in recent years, it was found that appraisers did not fully understand this process, so USPAP was updated in 2006 with a new scope of work rule. The rule requires that the minimum standards for scope of work are a) expectations of the client and other users, and b) the actions of other appraisers who carry out similar assignments. The rule also states that appraisers need to identify six components of the appraisal before the actual appraisal begins:

The client requesting the appraisal
The intended use of the appraisal report
The value (market, foreclosure, investment)
Any hypothetical conditions or assumptions
The date of the appraisal report
The relevant features of the property

Using these components, the appraiser identifies the scope of work.

The scope of work is the first step in any appraisal. Without a specific scope of work, the conclusions of an appraisal may not be viable. By defining the scope of work, an appraiser can develop a value for a property, which is the intended use of the appraisal.

By: Present Value