Under which of the following situations is the payment or receipt of a commission by a public accountant (PA)permissible?
A)A PA has a lawyer for an audit client;each time the lawyer helps the PA by referring a new client,the PA pays the lawyer a $1,000 referral fee.
B)A PA performs a review of the financial statements of a client.The PA also works as a commissioned salesperson for that client.
C)A PA has a dry-cleaning business as a client.The PA is given a 10% discount on cleaning services each time a new customer comes to the dry cleaner on the recommendation of the PA.The PA only prepares tax returns for the dry-cleaning business.
D)An audit client that sells automobiles pays the PA $500 each time a customer that was referred to the audit client by the PA buys a car.

Question

Quizplus · Accepted Answer

According to the AICPA Code of Professional Conduct, a public accountant may receive a commission or referral fee if the professional service being offered is not prohibited by the rules of the Professional Conduct. In this scenario, the PA only prepares tax returns for the dry-cleaning business and is receiving a discount on cleaning services, which is not a prohibited act. However, in scenarios A, B, and D, the PA is receiving commissions or referral fees for services that could create a conflict of interest or impair their independence, which are prohibited by the AICPA Code of Professional Conduct.

Under Which of the Following Situations Is the Payment or Receipt