Following is a question and answer transcript highlighting some of the frequent inquiries sent to the MACPA Professional Ethics Task Force. Responses to the inquiries have been tailored to specific questions presented and may not consider all of the unique circumstances that are part of an ethical inquiry. Attempt your own answers before reading the “unofficial” opinion of the Task Force.

I was contacted by a payroll provider and received marketing material about a program whereby my firm will receive free payroll processing in exchange for the referral of a certain amount of clients. Are there any ethical implications with which I should be concerned
or aware?

Yes, the AICPA Code of Professional Conduct specifically addresses this issue in Rule 503 – Commissions and Referral Fees. The Rule states:

A. Prohibited commissions
A member in public practice shall 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 the member or the member's firm also performs for that client
(a) an audit or review of a 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.
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.

B. 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 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.

C. 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.

[As adopted May 23, 1990, effective August 9, 1990.]