Regulation Differs Between Accountants and Appraisers?
by Mike Armentrout
So the other day was ironically Friday the thirteenth. It started off without a hitch until I got
the dreaded call from my accountant. He
hit me with the news that my various personal returns and first quarterly
estimates would result in me writing checks that totaled over $16,000. I spent the weekend pouring over the numbers
and still could not figure out how I owed so much more than the prior year and
yet only made a few hundred dollars more than last year.
I talked and texted the accountant several times with questions
in hopes of finding cause for revision, but was met with only
disappointment. I am sure he could sense
my growing frustration. In fact, I’m
sure the thought crossed his mind that after twenty four years of doing taxes
for our company and the personal taxes of my business partner and myself; he
just might lose us as a client.
Then it hit me. This
was eerily similar to many calls we get as appraisers from disgruntled AMCs,
lenders, realtors, sellers, buyers, builders, attorneys and all clients. My accountant was experiencing pressure. After all, potentially losing tens of
thousands of dollars over a long-term working relationship could potentially
influence how he proceeded with completing our accounting.
The parallels between accounting and appraisal are very
similar. USPAP is to appraisers what
Generally Accepted Accounting Principles (GAAP) is to accountants. The Certified Public Account (CPA) license is
regulated in very similar way to appraisal licensing and has similar benchmarks
to be eligible for.
One key difference is that the accounting profession does
not seem to be the subject of landmark legislative and regulatory acts. Their business model is not forcibly altered
by bureaucrats every twenty years. (eg. FIRREA, HVCC, Dodd-Frank) While I
understand that it is the banks and the publically backed billions of dollars that
invite the scrutiny of appraisers, it still seems that basic market principles
would apply.
If I want to continue in my livelihood and career, then I
will have to work within the natural checks and balances of the market. I won’t be able to work for some clients if I
lose my eligibility on lender-approved rosters by completing sub-standard
reports. How long will we be in business
if we are repeatedly sued? Involvement
in fraudulent activity will not promote longevity if one is criminally
charged. How will sanctions affect our
public reputation? The list continues on
but at the end of the day, one must weigh the pressure to do something
unprofessional or ethically nefarious against the possible or eventual
consequences. This constitutes what we
call liability and it is that which tends to self-regulate our profession as
well as that of accountants and most other businesses.
We simply don’t have regulations that dictate who an
accountant’s clients can and can’t be. No
one is crying for a firewall between CPAs and disgruntled clients who end up
with tax burdens they don’t like. What
government agency will come riding in on a white horse when I take my receipts
and Profit & Loss statement to my accountant and demand a low tax
burden?
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