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financial statement; orb. a compilation of a financial statementwhen the memberexpects, or reasonably might expect, thata third party will use the financial statementand the member’scompilation report does not disclosea lack of independence; orc. an examination of prospective financial information..02This prohibition applies during the period in which the memberis engaged to perform any of the serviceslisted above and the period covered by any historical financial statementsinvolved in such listed services..03Disclosure of permitted commissions.A memberin public practicewho is not prohibited by this rule fromperforming services for or receiving a commission and who is paid or expects to be paid a commission
Part 1 — Members in Public Practice120shall disclose that fact to any person or entity to whom the memberrecommends or refers a product orservice to which the commission relates..04Referral fees.Any memberwho accepts a referral fee for recommending or referring any service of aCPA to any person or entity or who pays a referral fee to obtain a clientshall disclose such acceptance orpayment 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 Rule1.520.005 Application of the Conceptual Framework for Members in Public Practice and EthicalConflicts.01In the absence of an interpretationof the “Commissions and Referral Fees Rule” [1.520.001] that addressesa particular relationship or circumstance, a membershould apply the “Conceptual Framework for Membersin Public Practice” [1.000.010]..02A memberwould be considered in violation of the “Commissions and Referral Fees Rule” [1.520.001] ifthe membercannot demonstrate that safeguardswere applied that eliminated or reduced significant threatsto an acceptable level..03A membershould consider the guidance in “Ethical Conflicts” [1.000.020] when addressing ethicalconflicts that may arise when the memberencounters obstacles to following an appropriate course of action.Such obstacles may be due to internal or external pressures or to conflicts in applying relevant professionaland legal standards, or both. [No prior reference: new content]Effective Date.04Paragraphs .01 and .02 are effective December 15, 2015, and early implementation is allowed providedthe member has implemented the revised code. Paragraph .03 is effective December 15, 2014.1.520.020 Receipt of Commission.01A commission is considered to be received when the performance of the related services is complete andthe fee has been determined. For example, if in one year a membersells a life insurance policy to a client,and the member’scommission payments are determined to be a fixed percentage of future years’ renewalpremiums, the commission is deemed to be received in the year that the policy is sold. [Prior reference:paragraphs .367–.368 of ET section 591]