In the best interest of both REM’s readers and the public in general, the Appraisal Institute of Canada (AIC) appreciates the opportunity to set the record straight as it relates to the appraisal standards that were referred to in the article by Steven Coull, executive director, CNAREA in the September issue of REM.
Although AIC members had used the American Uniform Standards of Professional Appraisal Practice, or USPAP since 1994, after consulting with and receiving expressions of approval from its members and their clients, the institute developed and established the Canadian Uniform Standards of Professional Appraisal Practice starting in 1998.
Practice standards arise out of an established body of knowledge and are developed to provide guidance to practitioners in the performance of their work. Occupational standards generally address more narrowly channeled skill sets and tend to be prescriptive, providing practitioners with precise, but limited guidelines. Professional standards, on the other hand, take into account the greater breadth and depth of knowledge and skills of the professional and are less prescriptive allowing practitioners a greater degree of freedom in exercising their professional judgment. Further, as public standards, they have the public’s welfare at heart and are generally supported by policies and processes that ensure compliance and punish those who commit ethical or standards violations.
The AIC’s Canadian Uniform Standards of Professional Appraisal Practice are made‑in‑Canada professional standards that effectively support the multi-disciplinary, value-added, real estate valuation services that AIC members provide to a wide range of clients across Canada. They allow the institute’s highly qualified members to exercise professional discretion and provide their clients with the advice, opinions and solutions they seek.
Moreover, the Canadian Standards have responded well to the needs of the Canadian marketplace, and its regulatory environment, both of which are substantially different from the USA. The complexity of the American USPAP with its 10 standards plus Supplemental Standards, Statements, Advisory Opinions and Guide Notes was replaced with less prescriptive standards that allow professional valuers to better exercise their professional judgment in carrying out their work. The Canadian Standards, like the American USPAP:
1) Have a public service objective.
2) Require adherence to the ethical principles of objectivity, independence, and impartiality.
3) Contain sufficient development requirements for developing credible opinions.
4) Contain sufficient reporting requirements for proper disclosure.
The AIC’s Canadian standards have been well received by stakeholders in Canada and recognized by the American valuation professions, and The Appraisal Foundation as “substantially equivalent” to USPAP.
In the USA, lenders who are federally regulated must, by law, use USPAP compliant reports in their real estate lending activities. There is a wide array of real estate and related valuation activities that fall outside this parameter, where USPAP may or may not apply. Furthermore, the legislation only applies to transactions above a certain dollar amount.
It is only when AIC members perform work for US clients where a real estate secured loan is being made by a federally regulated financial institution that they must comply with USPAP standards. For all other assignment types, the standards that will apply depend on the agreement that is reached with the client. Even then, only minor changes are required to create a report that is in compliance with both sets of standards. Changes, where required, are to the nomenclature, as both standards are based on identical concepts of value, integrity in reporting and ethical conduct.
And finally, the Canadian Standards are not intended to provide protection to appraisers – they are to protect users of appraisals such as lenders and the general public. We are not aware of one occurrence where an appraisal report in Canada has been rejected by the courts or by appraisal users because they are not USPAP compliant.
While the use of the Canadian Standards by AIC members satisfies their clients’ need for quality assurance, it is the AIC designations that brokers, lenders, and other clients demand and rely upon when they seek the services of professional real estate valuers.
The institute and its members are proud to have developed “made in Canada” standards, which are relevant to the Canadian marketplace. These established, and widely accepted professional standards are in the public interest and underpin the value-added services provided by the Appraisal Institute of Canada’s highly-qualified membership.
Copies of the Canadian Uniform Standards of Professional Appraisal Practice are accessible at www.aicanada.ca https://www.aicanada.ca/e/resourcecenter_document.cfm
Brad Wagar, AACI, P.App,
President
Appraisal Institute of Canada
Ottawa
