I'm So Confused

Such a simple thing, yet it turns out to be somewhat complicated and controversial. At times it is a one-size fits-all list of all the instruments the appraiser has in his or her laboratory. On the other hand, a check-off style list with check marks indicating actual instruments used in the authentication process might be encountered. Computer generated lists may or may not list unused instruments.

One may use an instrument list because they copied another appraiser's report, have mandatory requirements from a professional society or perhaps it was part of some valuation software. Regardless of how one decides to include a list, one must know if there are any rules regarding its inclusion if the appraiser claims to adhere to a given set of standards.

However, using an instrument list seems to be confined to jewelry appraisals. "We don't typically list equipment when appraising property such as furniture, autographs and the like," reflects Brian Kathenes, ISA S-CAPP, Managing Partner of National Appraisal Consultants, LLC. "Instrument lists seem to be confined to the jewelry specialty as I don't recall seeing them in other appraisal [disciplines]."

        Computers are Everywhere and They Run Our Lives

There are only a few major software programs used by gemologist-appraisers. One of these is the GemGuide Appraisal Software by Gemworld. Richard Drucker, owner of the software, explained that an instrument list is not hardwired into the software. A user would have to add it to their limiting conditions page which they can develop within the software or in basic word processing if they would like to include it. "While I am not a proponent of these lists, in our own appraisal practice, we have a general list of the major equipment that we have in our laboratory and this list is part of our appraisal information document that we include with every appraisal."

Richard also counsels appraisers that the list should not include insignificant instruments, such as tweezers, cleaning cloths, etc. He points out that just enough detail is necessary so as not to mislead the reader who is not a trained gemologist. Keep it brief. "I have seen extensive lists on appraisals that detail so much equipment, that the appraiser could not possibly have performed all those tests."

        Is Ignorance of the Rules An Excuse?

Those ubiquitous instrument lists are not merely confined to individual appraisers but in some cases may be required by appraisal associations. The NAJA in their Minimum Standards for Appraisal Content manual states that a list of equipment used is required.

Gail Levine, GG, Executive Director of NAJA, and practicing independent appraiser, was asked to add some precision to that rule. She made it clear that NAJA is currently editing the 2005 copyrighted Minimum Standards for Appraisal Content to bring further clarity of use by its members. One of the standards earmarked for further clarification is Listing of Equipment Used.

She added that NAJA cautions the appraiser to use this option judiciously. For example, an appraiser can list instruments if they wish but it is not recommended that a boiler plate list of instruments be used. "Appraisers must be aware that when multiple items are included in one report," emphasized Gail, "the appraiser will have to make it clear which instruments were used with which items."

The American Society of Appraisers (ASA) recommends to "state the use of specific instruments only if it aids in understanding the methodology or is needed to support specific identification conclusions," according to ASA past president, Larry Phillips, MGA (Master Appraiser Gemologist), FASA (Fellow ASA). "On the other hand," he adds, "If such a statement is superfluous, do not include it. In any case, the widely used standard 'checklist' of instruments is not generally advisable."

One document that offers a standard from which societies, course writers and appraisers at large are using as a limited standards resource is the Uniform Standards for Professional Appraisal Practice (USPAP). In USPAP, a requirement exists that each written or oral personal property appraisal report must, "clearly and accurately set forth the appraisal in a manner that will not be misleading; contain sufficient information to enable the intended users of the appraisal to understand the report properly; and clearly and accurately disclose all assumptions, extraordinary assumptions, hypothetical conditions, or limiting conditions used in the assignment."² It does not specifically embrace or exclude the use of an instrument list.

Some may point out that USPAP has a provision about reporting the scope of the work. Neither does this embrace or dissuade an appraiser from using an instrument list. It is the analysis and conclusions that are to be reported. This does not allude to an instrument list.

It is not unheard of for the courts to review the accept ed ethics and practices of a profession as a basis for their decisions.¹ However, such reviews are not binding on the courts. "Although including or excluding an instrument list is not a legal issue, as an attorney, I would ask an appraiser under testimony 'Why did you include it?' If the witness cannot answer why, then most likely it should not have been included" says Richard Wilson, a former adjunct professor with the Hasting School of Law and a litigation attorney.

        Bragging or Professionalism?

An instrument list may also impress the reader. "In a word," points out Cos Altobelli, chairperson for the AGS Appraisal Committee, "an instrument list is puffery."

And he is not alone. T.D. Wernick of San Antonio, Texas, an appraiser who was a peer reviewer of the Jewelers' Educational Foundation (JEF) and American Gem Society's (AGS) Advanced Personal Property Appraisal course (APPA) agrees. He points out that as critical to the public interest as medicine is, they do not include instrument lists in their reports. "If there is an issue with testing," adds Wernick, "then by all means an instrument list makes sense."

        What is the Answer?

Cos Altobelli sums it up for the appraiser who wants to include an instrument list when he cautions appraisers that, "An appraisal's basic premise is to not mislead the reader. If an instrument list names more instruments than used, that is misleading. If the list of instruments does not apply to each appraised item, then that is misleading."

I too have always thought that an instrument list was not necessary. It adds no real precision to the report. However, since an appraiser is the trustee of their clients' working notes, they must be included in a list of tests and instruments in those confidential files. If you must include an instrument list, make certain it is applicable to the items tested. In fact, if multiple items are involved, the list must be fine tuned to match each item.

Although we may never have the benefit of knowing just how these instrument lists came to be, one may conclude logically that perhaps appraisers copied the practice from others. Then, those appraisers rose to teach courses and seminars, publish articles or books and develop procedure rules for societies, thus elevating the practice to an even higher level. Regardless of how the practice came to be, should it be an option or mandatory? I think it should be an option.

Written by Bill Hoefer

<sup>1. USPAP, 2008-2009, in Standards Rule 8-1(a).    Back to Text ↑ ↑ ↑
2. USPAP, 2008-2009, in Standards Rule 8-1(vii), states in note 104 that one must state the scope of work used to develop the appraisal. The comment associated with this states "Because the clients reliance on an appraisal may be affected by the scope of work, the report must enable them to be properly informed and not misled. Sufficient information includes disclosure of research and analyses performed and might also include disclosure of research and analyses not performed."    Back to Text ↑ ↑ ↑
3. Published in Gem Guide, September-October 2008.
4. Illustrations - IStock.com.
5. Illustration - Antique post card owned by author.</sup>