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?