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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 14

The Institute of Business Appraisers (IBA) Business Appraisal Standards

The current version of the IBA Business Appraisal Standards has been in effect since October 25, 2001, but these rules were modified in 2008.

Standard One: Professional Conduct and Ethics

A certified business appraiser (CBA) must judge his or her competence to undertake an appraisal engagement prior to so doing.1 A CBA must “communicate the research and thought processes that led to his opinions and conclusions in a manner that is clear, meaningful, and not misleading.”2 CBAs are bound by a rule of confidentiality to refrain from disclosing either an appraisal “assignment itself or any of the reasonably identifiable contents of an appraisal report without the client's express permission.”3

A CBA must not accept an appraisal engagement “when the appraiser has a present or contemplated interest in the property being appraised, or a bias for or against any person associated therewith, either directly or indirectly.”4 A CBA must not be an advocate, unless engaged as a consultant and the appraiser includes a statement of departure to that effect.5

Although there is no strict requirement for engagement letters for CBAs, a CBA should enter into an engagement agreement that spells out, at a minimum,

what the appraiser is being engaged to appraise, the function (use) of the appraisal, the purpose (standard of value) including the definition thereof, the effective date of the appraisal, the scope of the appraisal, ...

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