Question

Unlike the acceptance of a contingent fee, a CPA who receives a commission or referral fee must ______.

Answer 1

A CPA must disclose any commissions or referral fees to their clients to ensure transparency and manage potential conflicts of interest, unlike contingent fees, which may be prohibited.

Step-by-step explanation:

Unlike the acceptance of a contingent fee, a CPA who receives a commission or referral fee must disclose such arrangements to their clients. Commissions and referral fees can create conflicts of interest, or the appearance thereof, and the CPA is ethically required to inform clients of these potential conflicts. In contrast, contingent fees, which are payments that depend on a specific outcome, may be prohibited in certain circumstances, especially when related to audit and assurance services.