According to CUSPAP, hypothetical conditions may be used when they are required for legal purposes, purposes of reasonable analysis, or purposes of comparison. The most common hypothetical conditions are utilized for appraisal reports, which include proposed improvements. For every hypothetical condition, an extraordinary assumption is required. When using hypothetical conditions, it is imperative that assumed hypothetical condition is reasonable and probable. It is important to be specific, because a reader who is relying upon the report can be misled. Taking the time to complete a well-worded report, including properly addressing extraordinary assumptions and hypothetical conditions, is a relatively simple and painless way to avoid a confrontation and a potential complaint against you in the future.
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