WAC 4-25-626
What restrictions govern commissions,
referral, and contingent fees? For the purposes of this
section, the term "licensed firm" includes any affiliated
entity(ies) and the term "firm owner" includes the owner(s) of
any affiliated entity(ies).
(1) Licensees and/or their employees must 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 such persons perform compilation, or other professional
services for which a report expressing assurance is prescribed
by professional standards for that client. This prohibition
applies:
(a) During the period in which such persons are engaged
to perform professional services for which a report expressing
assurance is prescribed by professional standards; and
(b) During the period covered by any information for
which a report expressing assurance is prescribed by
professional standards and a report was issued by such
persons.
(2) Licensees and/or their employees must also not:
(a) Perform for a contingent fee any professional
services for, or receive such a fee from a client for whom
such persons perform compilation, or other professional
services for which a report expressing assurance is prescribed
by professional standards; or
(b) Prepare an original or amended tax return or claim
for a tax refund for a contingent fee for any client.
(3) The prohibition against contingent fees applies:
(a) During the period in which such persons are engaged
to perform professional services for which a report expressing
assurance is prescribed by professional standards; and
(b) During the period covered by any information for
which a report expressing assurance is prescribed by
professional standards and a report was issued by such
persons.
(4) Fees are not considered contingent if fixed by courts
or other public authorities, or, in tax matters, if determined
based on the results of judicial proceedings or the findings
of governmental agencies. Fees may vary depending, for
example, on the complexity of services rendered.
(5) Any person subject to board rules who is not
prohibited by this section from performing services for, or
receiving a commission, referral or contingent fee and who are
paid or expect to be paid accordingly must disclose that fact
to any person or entity to whom such persons recommend or
refer a product or service to which the commission, referral
or contingent fee relates in the manner prescribed below:
(a) Disclose the arrangement in writing and in advance of
client acceptance;
(b) Disclose the method of calculating the fee or amount
of fee;
(c) Specify the licensee's, CPA-Inactive
certificateholder's, or nonlicensee firm owner's role as the
client's advisor; and
(d) Obtain the client's consent to the fee arrangement in
writing.
(6) Nothing in this rule shall be interpreted to preclude
licensees, as defined in WAC 4-25-410, CPA-Inactive
certificateholders, or nonlicensee firm owners from
purchasing, selling, or merging all or a portion of a licensed
firm or affiliated entity or to require disclosure to clients
of terms or payments made or received pursuant to the
purchase, sale, or merger.
[Statutory Authority: RCW 18.04.055(2). 08-18-016, §
4-25-626, filed 8/25/08, effective 9/25/08; 05-01-137, §
4-25-626, filed 12/16/04, effective 1/31/05; 02-04-064, §
4-25-626, filed 1/31/02, effective 3/15/02; 01-03-012, §
4-25-626, filed 1/5/01, effective 2/5/01; 98-12-055, §
4-25-626, filed 5/29/98, effective 6/29/98.]