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PAG LIN 1 1 Section 1. Section 542C.2, Code 1995, is amended to read 1 2 as follows: 1 3 542C.2 DEFINITIONS. 1 4 As used in this chapter, unless the context otherwise 1 5 requires: 1 6 1. "Accounting practitioner" means a person licensed by 1 7 the board as provided in this chapter, who does not hold a 1 8 certificate as a certified public accountant under this 1 9 chapter, and who offers to perform or performs for the public, 1 10 and for compensation, any of the following services: 1 111.a. The recording of financial transactions in books of 1 12 record. 1 132.b. The making of adjustments of such transactions in 1 14 books of record. 1 153.c. The making of trial balances from books of record. 1 164.d. Internal verification and analysis of books or 1 17 accounts of original entry. 1 185.e. The preparation of financial statements, schedules, 1 19 or reports. 1 206.f. The devising and installing of systems or methods of 1 21 bookkeeping, internal controls of financial data, or the 1 22 recording of financial data. 1 23 Nothing contained in this definition or elsewhere in this 1 24 chapter shall be construed to permit an accounting 1 25 practitioner to give an opinion attesting to the reliability 1 26 of any representation embracing financial information as 1 27 defined in section 542C.25, subsections 8 and 9. Any 1 28 transmittal letters and titles to financial statements 1 29 included in reports prepared by accounting practitioners shall 1 30 be labeled as unaudited. 1 31 2. "Commission" includes brokerage or other participation 1 32 fees. "Commission" does not include a contingent fee. 1 33 3. "Contingent fee" means a fee established for the 1 34 performance of any service pursuant to an arrangement under 1 35 which a fee will not be charged unless a specified finding or 2 1 result is attained, or under which the amount of the fee is 2 2 otherwise dependent upon the finding or result of such 2 3 service. "Contingent fee" does not mean a fee fixed by a 2 4 court or other public authority, or a fee related to any tax 2 5 matter which is based upon the results of a judicial 2 6 proceeding or the findings of a governmental agency. 2 7 4. "Practice of public accounting" means the performance 2 8 or the offering to perform, by a person holding oneself out to 2 9 the public as a certified public accountant or accounting 2 10 practitioner, one or more kinds of services involving the use 2 11 of accounting or auditing skills, including the issuance of 2 12 reports on financial statements, or of one or more kinds of 2 13 management advisory, financial advisory, or consulting 2 14 services, or the preparation of tax returns or the furnishing 2 15 of advice on tax matters. 2 16 Sec. 2. Section 542C.3, subsection 4, paragraph d, Code 2 17 1995, is amended by striking the paragraph. 2 18 Sec. 3. Section 542C.3, subsection 5, paragraph b, Code 2 19 1995, is amended by striking the paragraph. 2 20 Sec. 4. Section 542C.3, Code 1995, is amended by adding 2 21 the following new subsection: 2 22 NEW SUBSECTION. 5A. A certified public accountant or 2 23 accounting practitioner may accept commissions or contingent 2 24 fees subject to the following: 2 25 a. (1) A certified public accountant or accounting 2 26 practitioner shall not for a commission recommend or refer to 2 27 a client any product or service, shall not for a commission 2 28 recommend or refer any product or service to be supplied by a 2 29 client, and shall not receive a commission from a client, if 2 30 the certified public accountant or accounting practitioner, or 2 31 a person associated with the certified public accountant or 2 32 accounting practitioner in the practice of public accounting, 2 33 also performs for that client any of the following: 2 34 (a) An audit or review of a financial statement. 2 35 (b) A compilation of a financial statement if the 3 1 certified public accountant or accounting practitioner 3 2 expects, or reasonably might expect, that a third party will 3 3 use the financial statement, and the compilation report, of 3 4 which the financial statement is a part, does not disclose a 3 5 lack of independence. 3 6 (c) An examination of prospective financial information. 3 7 (2) The prohibition in subparagraph (1) applies during the 3 8 period in which the certified public accountant or accounting 3 9 practitioner, or a person associated with the certified public 3 10 accountant or accounting practitioner in the practice of 3 11 public accounting, is engaged to perform any of the services 3 12 listed in subparagraph (1), subparagraph subdivision (a), (b), 3 13 or (c), and the period covered by any historical financial 3 14 statements related to such services. 3 15 (3) A certified public accountant or accounting 3 16 practitioner engaged in the practice of public accounting who 3 17 is not prohibited from performing services for a commission or 3 18 receiving a commission, and who is paid or expects to be paid 3 19 a commission, shall disclose that fact to any person or entity 3 20 to whom the certified public accountant or accounting 3 21 practitioner recommends or refers a product or service to 3 22 which the commission relates. 3 23 b. A certified public accountant or accounting 3 24 practitioner engaged in the practice of public accounting 3 25 shall not receive or agree to receive a contingent fee from a 3 26 client for either of the following: 3 27 (1) Performance of any professional services for a client 3 28 for whom the certified public accountant or accounting 3 29 practitioner, or person associated with the public accountant 3 30 or accounting practitioner in the practice of public 3 31 accounting, performs any of the following: 3 32 (a) An audit or review of a financial statement. 3 33 (b) A compilation of a financial statement if the 3 34 certified public accountant or accounting practitioner 3 35 expects, or reasonably might expect, that a third party will 4 1 use the financial statement, and the compilation report, of 4 2 which the financial statement is a part, does not disclose a 4 3 lack of independence. 4 4 (c) An examination of prospective financial information. 4 5 (2) Preparation of an original or amended tax return or 4 6 claim for a tax refund. 4 7 The prohibition in subparagraph (1) applies during the 4 8 period in which the certified public accountant or accounting 4 9 practitioner is engaged to perform any of the services listed 4 10 in subparagraph (1), subparagraph subdivision (a), (b), or 4 11 (c), and the period covered by any historical financial 4 12 statements involved related to such services. 4 13 c. A certified public accountant or accounting 4 14 practitioner who accepts a referral fee for recommending or 4 15 referring any service of a certified public accountant or 4 16 accounting practitioner to any person or entity, or who pays a 4 17 referral fee to obtain a client, shall disclose the acceptance 4 18 or payment of such fee to the client. 4 19 d. A fee charged by a certified public accountant or 4 20 accounting practitioner may vary depending on the complexity 4 21 of the services rendered. 4 22 Sec. 5. Section 542C.3, subsection 6, Code 1995, is 4 23 amended to read as follows: 4 24 6. The board shall establish rules relative to the conduct 4 25 of practice as a certified public accountant and accounting 4 26 practitioner in respect to the enumerated items in subsections 4 27 4,and5, and 5A, but this direction is not a limitation upon 4 28 the rights of the board to make and adopt any rules relating 4 29 to the conduct of certified public accountants or accounting 4 30 practitioners which are not specifically enumerated in this 4 31 chapter. 4 32 EXPLANATION 4 33 This bill establishes limitations on when a commission or a 4 34 contingent fee may be paid to a certified public accountant or 4 35 an accounting practitioner. 5 1 Section 542C.2 is amended by adding definitions for the 5 2 terms "commission" and "contingent fee". 5 3 Section 542C.3 is amended by striking contingent fees from 5 4 the list of items concerning which the board is to adopt 5 5 rules. The section is also amended by striking language 5 6 prohibiting the acceptance of a commission, brokerage, or 5 7 other participation in the fees, charges, or profits of work 5 8 recommended or turned over to the laity as incident to 5 9 services for clients. 5 10 Section 542C.3 is amended by creating a new subsection 5A 5 11 which relates to the fees and commissions which a certified 5 12 public accountant or accounting practitioner may accept. The 5 13 subsection provides that a certified public accountant or 5 14 accounting practitioner shall not for a commission recommend 5 15 or refer to a client any product or service, shall not for a 5 16 commission recommend or refer any product or service to be 5 17 supplied by a client, and shall not receive a commission from 5 18 a client, when the certified public accountant or accounting 5 19 practitioner, or a person associated with the certified public 5 20 accountant or accounting practitioner in the practice of 5 21 public accounting, also performs certain other identified 5 22 services for that client. The subsection also prohibits a 5 23 certified public accountant or accounting practitioner from 5 24 accepting a contingent fee from a client if certain other 5 25 identified services are performed for the client, and 5 26 prohibits the acceptance of a contingent fee for the 5 27 preparation of an original or amended tax return or claim for 5 28 a tax refund. 5 29 LSB 3116SV 76 5 30 mj/sc/14.1
Text: SF02098 Text: SF02100 Text: SF02000 - SF02099 Text: SF Index Bills and Amendments: General Index Bill History: General Index
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