Chapter 1: Scope and the Canadian Residential Appraiser

Question 1

Except for reserve fund studies, CRA-designated members are limited to signing reports on their own for assignments involving properties, including land, where the actual or assumed highest and best use is no more than which of the following?
1.) Two residential dwelling units
2.) Two commercial units
3.) Four commercial units
4.) Four residential units

Answer 1

4.) Four residential dwelling units

Question 2

When it comes to CRA scope, which of the following options does the CRA have?
1.) Accept the assignment because it is within scope.
2.) Have the report co-signed by an AACI.
3.) Decline the assignment.
4.) All of the above.

Answer 2

4.) All of the above

Question 3

Presumed facts about a property that are either uncertain or are simulated but are untrue are known as which of the following?
1.) Extraordinary limiting conditions
2.) Extraordinary assumptions
3.) Hypothetical conditions
4.) Depreciated improvements

Answer 3

2.) Extraordinary assumptions

Question 4

Timothy has been tasked with appraising a single-family dwelling. Timothy opts not to apply the cost approach while appraising the dwelling. Timothy’s choice not to apply the cost approach is an example of which of the following?
1.) Hypothetical condition
2.) Extraordinary assumption
3.) Extraordinary limiting condition
4.) Extraordinary improvement

Answer 4

3.) Extraordinary limiting condition

Question 5

Which of the following statements regarding scope of practice is FALSE?
1.) Scope of practice is focused on an individual’s qualifications to do the work.
2.) Scope of practice delineates the boundaries within which an individual can safely, ethically, and competently practice in the fields of appraisal, review, consulting, or reserve fund studies
3.) Scope of practice refers to the depth of work to be completed for an assignment, ranging from very simple, straightforward tasks to highly complex data analysis and reconciliation.
4.) Scope of practice refers to the possibilities and limitations for the work you might do as a professional, based on your education and experience.

Answer 5

3.) FALSE - Scope of practice refers to the depth of work to be completed for an assignment, ranging from very simple, straightforward tasks to highly complex data analyses and reconciliation.

Question 6

Which of the following is the ONLY defined limitation on the scope of practice for AACI-designated members?
1.) Competency
2.) Size of property
3.) Type of property
4.) Adequate supervision

Answer 6

1.) Competency

Question 7

Which of the following statements regarding extraordinary limiting conditions, hypothetical conditions and extraordinary assumptions is FALSE?
1.) Hypothetical conditions must always be accompanied by an extraordinary assumption.
2.) By stating a hypothetical condition and an extraordinary assumption regarding a property’s assumed highest and best use, the CRA may proceed so long as the conditions and assumptions do not result in a misleading report.
3.) Extraordinary assumptions and extraordinary limiting conditions always require hypothetical conditions.
4.) The onus is on the appraiser to explain and justify the necessity of the assumptions, conditions, and limitations in the report.

Answer 7

3.) FALSE - Extraordinary assumptions and extraordinary limiting conditions always require hypothetical conditions.

Question 8

If Janine is a CRA who is drafting a letter of engagement for one of her clients, which of the following should be included in the letter of engagement?
1.) The level of due diligence to be undertaken
2.) What specifically will be analyzed
3.) Any specific purposes for which the report cannot be relied upon (e.g. not prepared for court purposes)
4.) All of the above

Answer 8

4.) All of the above

Question 9

Which of the following questions will help a CRA specify the scope of work for a particular assignment?
1.) What type of property is the subject?
2.) What is the purpose of the assignment?
3.) Will I have access to inspect the property?
4.) All of the above

Answer 9

4.) All of the above

Question 10

Extraordinary limiting conditions are unacceptable in any assignment where they do which of the following?
1.) Compromise an appraiser’s impartiality, objectivity, or independence
2.) Limit the scope of work to such a degree that the results are not credible given the purpose of the assignment and the intended use of the results
3.) Limit the content of a report that results in the report being misleading
4.) All of the above

Answer 10

4.) All of the above

Question 11

Which of the following statements regarding reserve fund studies is FALSE?
1.) Reserve fund studies are also known as depreciation reports
2.) Reserve fund studies are completed to help condominium boards/strata councils plan for the long-term repair or replacement of the project’s common property
3.) One of the requirements for a reserve fund study is a financial analysis
4.) Reserve fund studies do not require a physical inspection

Answer 11

4.) Reserve fund studies do not require a physical inspection

Question 12

Which of the following is NOT an example of an ordinary assumption or a limiting condition?
1.) the level of research and analysis undertaken
2.) A non-existing condition that is presumed for the purpose of the analysis
3.) The extent of the inspection of the property (full, partial, none)
4.) Limitations with regards to the scope of practice and competence, e.g. environmental issues, surveys, title searches, general liability

Answer 12

2.) A non-existing condition that is presumed for the purpose of the analysis

Question 13

Which of the following determines the extent of the CRA’s scope of practice limitations?
1.) Holding an additional commercial appraisal designation from another association
2.) Highest and best use, actual or assumed
3.) Location of the property
4.) Adequate professional liability insurance

Answer 13

2.) Highest and best use, actual or assumed

Question 14

According to CUSPAP’s Ethics Standard Rules, which of the following is the ultimate test of credibility for an appraiser?
1.) Whether there is a co-signing AACI
2.) Whether the appraiser has a certain number of years of experience
3.) Whether the appraiser’s opinions and conclusions are found to be credible by their peers
4.) Whether the appraiser has properly identified the purpose of the assignment

Answer 14

3.) Whether the appraiser’s opinions and conclusions are found to be credible by their peers.

Question 15

The reviewer’s scope of work is BEST defined as which of the following?
1.) To present the appraiser with an initial estimate of value before the appraiser creates their own report
2.) Solely to develop a second estimate of value for the property
3.) The problem-solving process that comes with reviewing another appraiser/practitioner’s report
4.) All of the above

Answer 15

3.) The problem-solving process that comes with reviewing another appraiser/practitioner’s report

Question 16

Which of the following statements regarding the scope of a review assignment is TRUE?
1.) If the reviewer develops their own opinion of value, the reviewer must develop a scope of work that covers both the review and the appraisal requirements, which means complying with two standards: the Review Standard and the Appraisal Standard.
2.) The reviewer is not allowed to develop their own opinion of value
3.) It is not sufficient to simply verify the arithmetic in the report under review
4.) CUSPAP does not permit the results of the review and a separate opinion of value to be included in one report

Answer 16

1.) If the reviewer develops their own opinion of value, the reviewer must develop a scope of work that covers both the review and the appraisal requirements, which means complying with two standards: the Review Standard and the Appraisal Standard

Question 17

Which of the following is a catch-all description for the various types of work that valuation professionals get involved in beyond traditional appraisal?
1.) Consulting assignments
2.) Review assignments
3.) Reserve fund studies
4.) Extraordinary scope of practice

Answer 17

1.) Consulting assignments

Question 18

A reliance letter does which of the following?
1.) States the original terms of reference for the work
2.) Helps condominium/strata boards plan for the long-term repair or replacement of the project’s common property
3.) Gives permission to parties other than the intended user to use the appraiser’s report for their own purposes
4.) Allows the valuation professional to step away from CUSPAP rules

Answer 18

3.) Gives permission to parties other than the intended user to use the appraiser’s report for their own purposes

Question 19

Which of the following BEST describes the appraiser’s client?
1.) The person who engages the appraiser to complete the assignment
2.) The person who pays for the assignment
3.) Any person who intends to rely on the assignment for their own use; whether or not the appraiser has given explicit permission
4.) All of the above

Answer 19

1.) The person who engages the appraiser to complete the assignment

Question 20

According to CUSPAP, the burden of proof to support the scope of work decision and the level of information included in a report lies on which of the following?
1.) The member
2.) The client
3.) The Appraisal Institute of Canada’s Investigating Committee
4.) All of the above

Answer 20

`1.) The member