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Help Yourself Avoid Ethical Dilemmas

The December hypothetical ethics question dealt with what to do when a report has been altered.

Responses indicated there are some steps to be taken before the report was filed, proving that a little prevention can avoid a lot of pain.

The December question was:


A consulting geologist is asked to evaluate a prospect for a client with the understanding that the geologist's report, if favorable, will be used to promote the prospect to investors. The geologist undertakes the assignment, concludes the prospect warrants drilling and a copy of the report is used in the offering material.


Later, the client asks the geologist to review another prospect. Again the geologist concludes that the prospect warrants drilling and submits a report.


A couple of weeks later the geologist calls the client and asks for a copy of the offering material. When the material is received, the geologist discovers that a reserve estimate for the prospect has been added to his report -- an estimate he did not prepare.


What should this geologist do?


Terrel Shields, a certified appraiser in Siloam Springs, Ark., wrote:

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The December hypothetical ethics question dealt with what to do when a report has been altered.

Responses indicated there are some steps to be taken before the report was filed, proving that a little prevention can avoid a lot of pain.

The December question was:


A consulting geologist is asked to evaluate a prospect for a client with the understanding that the geologist's report, if favorable, will be used to promote the prospect to investors. The geologist undertakes the assignment, concludes the prospect warrants drilling and a copy of the report is used in the offering material.


Later, the client asks the geologist to review another prospect. Again the geologist concludes that the prospect warrants drilling and submits a report.


A couple of weeks later the geologist calls the client and asks for a copy of the offering material. When the material is received, the geologist discovers that a reserve estimate for the prospect has been added to his report -- an estimate he did not prepare.


What should this geologist do?


Terrel Shields, a certified appraiser in Siloam Springs, Ark., wrote:

Perhaps the question is what should the geologist have already done?

Ethics involves two distinct efforts: Solving the problem and report writing. Since such reports are appraisals, then a logical solution would be to prepare the report as an appraisal is prepared.

Report writing should include the following.

  1. The purpose and intended use of the report.
  1. The effective date of the report.
  1. Summarize the extent of the process of collecting, confirming and reporting the data. Consider and reconcile the quantity and quality of the data.
  1. State all assumptions and limiting conditions that affect the analysis, opinions and conclusions. That should include a disclaimer regarding alterations or additions to the report.

    That disclaimer should be included in the letter of transmittal as well.

  1. Acknowledge any assistance, and disclose any potential conflicts of interest, lack of knowledge, etc.
  1. Sign and seal the report. It would not be inappropriate in a short report to place a seal or professional stamp on each page of the report and on any map transmitted.

Also, in accepting the assignment, a letter of engagement should be used to spell out the services the geologist will perform.

If the report has been properly prepared with the pages sequenced numerically, then any addition to the report by a third party does not make the geologist liable -- and would clearly be an addition.

Likewise, an electronically transmitted document should be sent in a format that cannot be altered.

If the report is altered and they discover it, the author should inform the client that the geologist will not be responsible for the addition.

Beyond that, a professional has no responsibility for those items added or otherwise used to alter his report. But an 'open ended' report may have the possibility of additions that the geologist did not authorize or intend, and he may have problems distancing himself from such an addition if the report does not clearly set forth its limiting conditions.


Richard L. Hester, of Cathedral City, Calif., offered some general thoughts on both ethical hygiene and remedies.

"Personal and professional integrity surely far out outweigh any potential monetary gains", he wrote:

I have personally been involved in all the different kinds of ethics challenges you have outlined. When I've been faced with these problems from bosses or persons for whom I've consulted, my answer has always been:

'You are paying me for my opinion. This report is mine -- my best opinion -- it's on file and I have my own copy. If you want to rewrite or change it in any way, take my name off it.'

If a changed report surfaces, your original signed and dated copy are always available to prove unauthorized changes had been made.

I have always quickly divorced myself from those potential problems by refusing the job -- or leaving one.

This is an especially tricky area of being an 'expert witness.' Don't get involved as an expert in any litigation in which you do not believe -- or can forcefully back up an opinion with proven logical examples. I have refused many such cases, because I couldn't support their contentions.

If they only want a name, let them get someone else.


"I'd contact the client and inform him of my extreme displeasure", wrote Robert F. Flory, a consulting geologist in El Paso, Texas.

I would instruct him to send a corrected offering approved by me that clarified the 'error' to all who had received the original. In the case of his failure to do so, I would go public, notify the appropriate state and federal agencies having jurisdiction and do my utmost to terminate his career in the business.

A client once buried a report of an environmental job. I had found floating product on the ground water less than 100 feet from tidal wetlands associated with the San Francisco Bay. I was prevented from discussing the report by confidentiality, but no such restrictions were placed on the well logs, which I was required to file directly with the state. Without discussing the content of the report or the content of the log, I saw to it the logs did not slip through the cracks.

Last heard the owner of the trucking company was being threatened with jail time. Suppression of data by site owners is serious business in California.

The next step in this case study is easy to see, according to Richard D. Hart, R.D. Hart and Associates in Austin, Texas:

The geologist in question should contact the company and it's lawyers via certified mail PDQ, Hart wrote. He should assume an honest error has been made in the presentation and request a new offering copy.

He may see no further work from this group for his trouble if an honest error has not been made, but he can sleep at night.