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Contingent Fees

TITLE 16. Professional and Vocational Regulations
DIVISION 1. Board of Accountancy Regulations

ARTICLE 9 - Rules of Professional Conduct

§ 62. Contingent Fees.

(a) A licensee shall not:
(1) Perform for a contingent fee any professional services for, or receive such a fee from, a client for whom the licensee or the licensee's firm performs:
(A) an audit or review of a financial statement; or
(B) a compilation of a financial statement when the licensee expects or reasonably should expect that a third party will use the financial statement and the licensee's compilation report does not disclose a lack of independence; or
(C) an examination of prospective financial information; or
(D) any other attest engagement when the licensee expects or reasonably should expect that a third party will use the related attestation report; or
(E) any other services requiring independence.
(2) Prepare an original tax return for a contingent fee for any client.
(3) Prepare an amended tax return, claim for tax refund, or perform other similar tax services for a contingent fee for any client.
(4) Perform an engagement as a testifying expert for a contingent fee. The prohibition in (a)(1) above applies during the period in which the licensee or the licensee's firm is engaged to perform any of the services listed under (a)(1) above and the period covered by any historical financial statements involved in any such listed services.
(b) Except as stated in the next paragraph, a contingent fee is a fee established for the performance of any service pursuant to an arrangement in which no fee will be charged unless a specific finding or result is attained, or in which the amount of the fee is otherwise dependent upon the finding or result of such service.
Solely for purposes of this section, fees are not regarded as being contingent if fixed by courts or governmental entities acting in a judicial or regulatory capacity, or in tax matters if determined based upon the results of judicial proceedings or the findings of governmental agencies in a judicial or regulatory capacity or there is a reasonable expectation of substantive review by a taxing authority.

NOTE: Authority cited: Sections 5010 and 5018, Business and Professions Code. Reference: Section 5018, Business and Professions Code.


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