Acpa 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?

No, this is not permitted under the AICPA Code of Conduct. The fee of the firm would have based solely on the success of their task. Under the Code, it is allowed to received payment based on the work they have done but it is not the sole basis for its payment. In this situation, there is no agreed payment except for the success of their task so there will be an opportunity of fraud for the firm here in order to receive the fee. To compensate this problem, the Code did not allow this type of payment terms (the fee is based solely in the success of the tax credits they may earn).

What's the rest of the problem? lol

Businesses