Ethics in Review
Reviewing some basic ethics points is always a good idea. For instance, did you know that ISA recently updated its Ethics Code and Ethics Disciplinary Procedures? Do you know what type of behavior ISA regulates (and does not regulate)? What are some of the most common ethics complaints and missteps?
Updated Ethics Code & Ethics Disciplinary Procedures
In 2019 the ISA Board approved updates to both the Ethics Code and the Ethics Disciplinary Procedures for the first time in more than 10 years. The effort focused on making the code more succinct and user-friendly. Both can be found here:
The ISA Disciplinary Procedures provides the rules for how the Ethics Committee operates and the procedures for bringing a Complaint against an ISA member. Complaints "may be initiated by...any ISA member having first-hand knowledge of alleged unethical conduct; or...any outside party having first-hand knowledge of alleged unethical conduct through direct dealings with the Respondent." ISA Code of Ethics Disciplinary Procedures, III, B. All complaints must be submitted in writing and cite the portion of the ethics code the complainant feels is being violated. ISA only reviews complaints that focus on behavior conducted while the member is acting as an appraiser.
What Type of Behavior Does the ISA Ethics Code Regulate?
Under the ISA Ethics Disciplinary Procedures, the Ethics Committee is only allowed to address "...appraisal related complaints against ISA members." ISA Code of Ethics, I.A. In order for the ISA Ethics Code to apply, the complaint must focus on the behavior's member when acting as an appraiser. Complaints that focus on other behavior are routinely dismissed.
Members often question why ISA only focuses on actions taken while the member is acting as an appraiser. Don’t we want our members to be acting professionally and ethically in everything that they do? The answer is, "Of course we do." But, ISA is an appraisal organization and we regulate appraisers.
Remember that under USPAP appraisers can wear several different hats. Many of us act as store/gallery owners, consultants, expert witnesses, estate sale people, etc. USPAP Advisory Opinion 21 discusses this in great detail. While I encourage each of you to reach AO 21 on your own, the general idea is that when conducting an Appraisal or Appraisal Review all of USPAP applies (including Standard Rules 7 & 8). When engaged in Appraisal Practice (and "Acting as an Appraiser") only certain portions of USPAP, specifically the Preamble, the definitions, the ethics rule, the competency rule, and the jurisdictional exception rules apply. Therefore, when I write a blog posts such as this, I am acting as an appraiser but not performing an appraisal or appraisal review. That means I am bound by the ethics rule, competency rule, etc. but not Standard Rules 7 & 8. When an ISA member is engaged in a Valuation Service (and not acting as an appraiser) USPAP does not apply, but the member is required to make sure that he does not misrepresent his role. So, if an ISA member is running an estate sale or acting as an auctioneer, USPAP does not apply as long as it is clear to your client that you are NOT acting as an appraiser in that role.
"Expectation is the crucial element in determining when one is acting as an appraiser." AO-21, pg. 109, lines 54-55. So, if you are advertising as an estate sale person but your client believes that he or she is hiring you as an appraiser, then the expectation is that you are an appraiser and some or all of USPAP will apply (depending upon the scope of work undertaken). In short, it is VERY important that if you wear multiple hats that you make it clear to your client (ideally in writing) which hat you are wearing. This is one of the reasons that contracts are so important. A contract clarifies in writing for all parties involved what your role is.
That being said, we encourage all members to act ethically and kindly towards all of their clients regardless of the hat being worn. Remember that your actions reflect back on ISA and your colleagues.
Common Ethics Complaints
The single most frequent complaint the Ethics Committee receives has to do with advertising credentials. Under ISA’s rules you are not allowed to advertise association with ISA until you reach the ISA Member level. This means that you have passed the ISA reference check, Core Course and the 15-hr personal property USPAP course.
Remember that all members must requalify every five years. If your membership level drops because you have not requalified, then you are only allowed to advertise your association with ISA at the lower level until you meet the requalification requirements and are reinstated. If in doubt, contact ISA headquarters for clarification about your status.