ET Section 503 - Commissions and Referral Fees 


    .01 Rule 503—Commissions and referral fees.

    A. Prohibited commissions

    A member in public practice shall not for a commission recommend or refer to a client any product or service, or for a commission recommend or refer any product or service to be supplied by a client, or receive a commission, when the member or the member's firm also performs for that client

    1. an audit or review of a financial statement; or
    2. a compilation of a financial statement when the member expects, or reasonably might expect, that a third party will use the financial statement and the member's compilation report does not disclose a lack of independence; or
    3. an examination of prospective financial information.

    This prohibition applies during the period in which the member is engaged to perform any of the services listed above and the period covered by any historical financial statements involved in such listed services.

    B. Disclosure of permitted commissions

    A member in public practice who is not prohibited by this rule from performing services for or receiving a commission and who is paid or expects to be paid a commission shall disclose that fact to any person or entity to whom the member recommends or refers a product or service to which the commission relates.

    C. Referral fees

    Any member who accepts a referral fee for recommending or referring any service of a CPA to any person or entity or who pays a referral fee to obtain a client shall disclose such acceptance or payment to the client.

    [As adopted May 23, 1990, effective August 9, 1990.]


    Interpretation under Rule 503

    —Commissions and Referral Fees


    [.02] [503-1]—[Deleted]







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