The principles of valuation practice recorded hereinabove relate to the primary objective of a valuation undertaking, namely the determination of the apposite numerical result with that degree of accuracy required by the attendant circumstances, whereas the principles recorded hereinafter relate to the establishment and maintenance of the confidence of clients and other interested parties in the validity of the results of valuation undertakings. To this end, certain practices are declared by the Association to be unethical and unprofessional.

Contingent Fees

If a valuer were to accept an engagement for which the amount of his compensation is contingent upon the amount of an award in asset settlement or a court action where his services are employed; or is contingent upon the amount of a tax reduction obtained by a client where his services are used; or is contingent upon the consummation of the sale or financing of a asset in connection with which his services are utilized or is contingent upon his reaching any finding or conclusion specified by his client; then, anyone considering using the results of the valuers undertaking might well suspect that these results were biased and self-serving and therefore, invalid. Such suspicion would militate against the establishment and maintenance of trust and confidence in the results of valuation work. Generally; therefore the Association declares that the contracting for or acceptance of any such contingent fee is unethical and unprofessional.

As a corollary to the above principle relative to contingent fees. The Association declares that it is unethical and unprofessional for a valuer (a) to contract for or accept compensation for valuation services in the form of a commission, rebate, division of brokerage commissions, or any similar forms and (b) to receive or pay finder's or referral fees.

Percentage Fees

The Association takes the position that it is unprofessional and unethical for the valuer to contract to do work for a fixed percentage of the amount of value, or of the estimated cost (as the case may be) which he determines at the conclusion of his work, except, when in the law and when insisted by the client.

Disinterested Valuations

Anyone using a valuer with an interest or a contemplated future interest in the assets valued, might well suspect that the report was biased and self-serving and, therefore, that the findings were invalid. Such suspicion tends to break down trust and confidence in the results of valuation work, generally.

Interests which a valuer may have in a asset to be valued, include ownership of the subject asset: acting, or having some expectation of acting, as agent in the purchase, sale, or financing of the subject asset; and managing, or have some expectation of managing, the subject asset. Such interests are particularly apt to exist if the valuer, while engaged in professional valuation practice, is also engaged in a related retail business (real estate, jewellery, furs, antiques, fine arts, etc.).

The Association declares that, subject to the provision for disclosure given in the following paragraph, it is unethical and unprofessional for a valuer to accept an assignment to value a asset in which he has an interest or a contemplated future interest.

However, if a prospective client, after full disclosure by the valuer of his present or contemplated future interest in the subject asset, still desires to have the valuer do the work, the latter may properly accept the engagement provided he discloses the nature and extent of his interest in his valuation report.

Responsibility Connected with Signatures to Valuation Reports

The user of a valuation report, before placing reliance on its conclusions, is entitled to assume that the party signing the report is responsible for the findings, either because he did the work himself or because the work was done under his supervision.

In cases where two or more valuers are employed to prepare a joint report, the user thereof is entitled to assume that, if all of them sign it, they are jointly and severally responsible for the validity of all of the findings therein; and, if all do not sign, he has a right to know what the dissenting opinions are.

To implement these principles, the Association declares that it is unethical (a) to misrepresent who made a valuation by appending the signature of any person who neither did the work himself nor had the work done under his supervision, (b) in the case of a joint report to omit any signatures or any dissenting opinions, (c) in case two or more valuers have collaborated in a valuation undertaking, for them, or any of them, to issue separate valuation reports, and (d) in case two or more valuers have been engaged by a single client to make independent valuations of the same asset, for them to collaborate or consult with one another or make use of each other's findings or figures.

A valuation firm or corporation may properly use a corporate signature with the signature of a responsible officer thereof. But the person who actually did the valuation for the corporation must sign the corporate valuation report or the report must acknowledge the person who actually made the valuation.

Advocacy

If a valuer, in the writing of a report or in giving an exposition of it before third parties or in giving testimony in a court action suppresses or minimizes any facts, data, or opinions which, if fully stated, might militate against the accomplishment of his client's objective or, if he adds any irrelevant data or unwarranted favorable opinions or places an improper emphasis on any relevant facts for the purpose of aiding his client in accomplishing his objective, he is, in the opinion of the Association, an advocate. Advocacy, as here described, affects adversely the establishment and maintenance of trust and confidence in the results of professional valuation practice and the Association declares that it is unethical and unprofessional.

Unconsidered Opinions and Preliminary Reports

If a valuer gives an opinion as to the value, earning power, or estimated cost of a asset without having ascertained and weighed all of the pertinent facts, such opinion, except by an extraordinary coincidence, will be inaccurate. The giving of such offhand opinions tends to be little the importance of inspection, investigation, and analysis in valuation procedure and lessens the confidence with which the results of good valuation practice are received, and therefore the Association declares the giving of hasty and unconsidered opinions to be unprofessional.

If a valuer makes a preliminary report without including a statement to the effect that it is preliminary and that the figures given are subject to refinement or change when the final report is completed, there is the possibility that some user of the report, being under the impression that it is a final and completed report, will accord the figures a degree of accuracy and reliability they do not possess. The results of such misplaced confidence could be damaging to the reputation of professional valuers, generally, as well as of the valuer concerned. To obviate this possibility, the Association declares it to be unprofessional valuation practice to omit a proper limiting and qualifying statement in a preliminary report. (N.B. It is desirable practice to give a range of assessed value)

Advertising and Solicitation

It is not unethical to advertise the availability of valuation services. It is unethical to use any inaccurate, misleading, false or deceptive claim, promise or representation in connection with any assignment. These unethical practices are considered by the Association to be detrimental to the establishment and maintenance of public confidence in the results of valuation work. The Association declares that such practices on the part of a valuer constitute unethical and unprofessional conduct. It would be unethical to do the following:

(a) Misrepresent in any way one's connection or affiliation with the PVAI or any other organization;

(c) Misrepresent services available or a valuer's prior or current service to any client, or identify any client without the express written permission of such client to be identified in advertising,

(d) Represent, guarantee or imply that a particular valuation or estimate of value or result of an engagement will be tailored or adjusted to any particular use or conclusion other than that a valuation will be based upon an honest and accurate adherence to the Principles of Valuation Practice.

Causes for Disciplinary Action by the Association

Disciplinary action against the members of the Association shall be taken in the event of violations of specific provisions of the Association's Constitution and Bylaws or of its Principles of Valuation Practice and the Code of Ethics incorporated therein. Such actions are under of jurisdiction of the Governing Council. Violations may fall under six categories:

(1) Deviations from standard valuation practice

(2) Failure to fulfill obligations and responsibilities

(3) Unprofessional conduct

(4) Unethical conduct

(5) Conviction in any Court

After due investigation, the Association may take action in the form of suggestion, censure, suspension, or expulsion, in the last event the member will be required to surrender his certificate and other evidences.