financial statement or b a compilation of a financial statement when the member

Financial statement or b a compilation of a financial

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financial statement ; or b. 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 c. an examination of prospective financial information. .02 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. .03 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
Part 1 — Members in Public Practice 120 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. .04 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 . [Prior reference: paragraph .01 of ET section 503] A nonauthoritative question and answer regarding disclosure of a commission is available at InterestAreas/ProfessionalEthics/Resources/Tools/DownloadableDocuments/Ethics-General-FAQs.pdf. Interpretations Under the Commission and Referral Fees Rule 1.520.005 Application of the Conceptual Framework for Members in Public Practice and Ethical Conflicts .01 In the absence of an interpretation of the “ Commissions and Referral Fees Rule ” [1.520.001] that addresses a particular relationship or circumstance, a member should apply the “ Conceptual Framework for Members in Public Practice ” [1.000.010]. .02 A member would be considered in violation of the “ Commissions and Referral Fees Rule ” [1.520.001] if the member cannot demonstrate that safeguards were applied that eliminated or reduced significant threats to an acceptable level . .03 A member should consider the guidance in “ Ethical Conflicts ” [1.000.020] when addressing ethical conflicts that may arise when the member encounters obstacles to following an appropriate course of action. Such obstacles may be due to internal or external pressures or to conflicts in applying relevant professional and legal standards, or both. [No prior reference: new content] Effective Date .04 Paragraphs .01 and .02 are effective December 15, 2015, and early implementation is allowed provided the member has implemented the revised code. Paragraph .03 is effective December 15, 2014. 1.520.020 Receipt of Commission .01 A commission is considered to be received when the performance of the related services is complete and the fee has been determined. For example, if in one year a member sells a life insurance policy to a client , and the member’s commission payments are determined to be a fixed percentage of future years’ renewal premiums, the commission is deemed to be received in the year that the policy is sold. [Prior reference: paragraphs .367–.368 of ET section 591]

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