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A Reviewer's Handbook to Business Valuation: Practical Guidance to the Use and Abuse of a Business Appraisal by Timothy R. Lee, L. Paul Hood Jr.

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Chapter 10

Uniform Standards of Professional Appraisal Practice (USPAP)

The purpose of the next several chapters is to review the valuation standards that have been issued by the major recognized appraisal professional organizations and government agencies. We will provide commentary and some practice tips on some of those provisions.

Even though IRS and the Congress intimate otherwise,1 there really are not universally recognized generally accepted appraisal standards as in public accounting's generally accepted accounting principles. There are now several organized efforts to promulgate valuation standards. Indeed, the IRS has promulgated business valuation standards. Additionally, the primary appraisal organizations also have standards to which their members are subject. Given the rise of fair value reporting requirements (among other financial reporting pronouncements from the Financial Accounting Standards Board), the need for and role of valuation standards has taken on new importance from the perspective of the investing public and market regulators.2

One of the earliest efforts to promulgate appraisal standards was made by the Appraisal Foundation, a nonprofit corporation created by Congress to promulgate valuation standards.3 These standards, the Uniform Standards of Professional Appraisal Practice (USPAP), are revised every two years as discussed in the next section. The USPAP table of contents, Ethics Rule, Competency Rule, Scope of Work Rule, Jurisdictional Exception ...

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