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TiliK225
1 month ago
14

A cpa firm performs the annual audit of the leahy group, a private company. the client has asked the firm to perform a study to

determine whether the company would qualify for certain municipal tax credits and prepare the request. the firm will receive 15 percent of any tax credits that leahy obtains for the client as a result of the request but no fees if the request is denied. city officials do not perform a substantive review of each request for tax credits. would this fee arrangement be permitted under the aicpa code of professional conduct?
Business
1 answer:
arsen [2.9K]1 month ago
7 0
No, this arrangement violates the AICPA Code of Conduct. The firm's fee is entirely contingent upon the success of their work, whereas the Code permits compensation based on effort but not solely on outcome. Since there is no guaranteed fee unless tax credits are awarded, this opens the door to potential misconduct by the firm. To prevent such risks, the Code disallows fees that depend exclusively on the achievement of tax credits.
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