Answered: In what circumstance is it permissible…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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In what circumstance is it permissible for a CPA to prepare an original tax return for a client on a contingent fee basis (“I’ll just take xx% of the refund I can get you!”)?

(a) Only if it is the client, not the CPA, who requests such an arrangement (with-out “prompting”).

(b) Only if the CPA’s firm has a written policy offering contingent fees and that written policy is provided to the client and the client in turn provides a signed ac-knowledgement of its receipt followed by a signed contingent fee agreement.

(c) Only if the client is not an individual – i.e., contingent fees are permissible only for corporate and other business-entity clients.

(d) Never.

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