Appraisal and Appraisal Review
The Uniform Standards of Professional Appraisal Practice (USPAP) defines an appraisal review as “the act or process of developing and communicating an opinion about the quality of another appraiser’s work that was performed as part of an appraisal or appraisal review assignment.” Considering our focus on financial reporting, most of our appraisal review clients are accounting firms requiring the support of a valuation specialist in an audit process. We typically review appraisals and valuation analyses performed for periodic mark-to-market fair value updates, purchase price allocations, and impairments. We review appraisals perform by other third party appraisers engaged by an audited entity, as well as valuation analyses performed by the audited entity’s management.
Our review process consists of the following components:
Property Identification - read the appraisal/valuation analysis, understand the subject property’s physical, locational and economic characteristics.
Methodology – develop an opinion regarding applicability of the methodologies utilized by the preparer related to the subject property, market, and purpose of the appraisal/valuation analysis.
Modeling – develop an opinion related to the applicability, quality and completeness of the models utilized by the preparer under each methodology.
Valuation Assumptions – develop an opinion related to the reasonability and support for the key valuation assumptions driving the appraisal/valuation analysis. In some cases, we also asked to perform underlying data testing relating to the market data used in the appraisal/analysis, as well as compile supplemental market research as additional support for the key valuation assumptions.
Mathematical Accuracy – check the accuracy of the calculations performed within each model.
Reconciliation – develop an opinion related to the reconciliation between value indications from multiple methodologies.
Our appraisal review reports are designed to communicate the review steps in a simple and concise manner. Our reports are frequently reviewed by auditors and regulatory bodies, such as the Public Company Accounting Oversight Board (PCAOB).
In addition, we provide appraisal review services for appraisal management firms serving lending institutions, as well as attorneys as part of litigation support.