Current through September 24, 2024
(1) As used in this rule unless the context
otherwise requires:
(a) "Attest" shall be
defined as in Tenn. Code Ann. §
62-1-103.
(b) "Audit" means an examination of financial
statements of a person or entity by a certified public accountant or public
accountant, conducted in accordance with generally accepted auditing standards,
to determine whether, in the opinion of the certified public accountant or
public accountant, the statements conform with generally accepted accounting
principles or, if applicable, with another comprehensive basis of
accounting.
(c) "Commission" means
compensation for recommending or referring any product or service to be
supplied by another person.
(d)
"Compilation of a financial statement" means a presentation of information in
the form of a financial statement that is the representation of any other
person without the undertaking of the certified public accountant or public
accountant to express any assurance on the statement.
(e) "Consideration" means compensation other
than a commission, including but not limited to compensation for recommending
or referring any service of a certified public accountant or public accountant
to any person.
(f) "Contingent fee"
means a fee established for the performance of any service pursuant to an
arrangement under which a fee will not be charged unless a specified finding or
result is attained, or under which the amount of the fee is otherwise dependent
upon a finding or result of such service. "Contingent fee" does not mean a fee
fixed by a court or other public authority, or a fee related to any tax matter
which is based upon the results of a judicial proceeding or the findings of a
governmental agency.
(g)
"Examination of prospective financial information" means an evaluation by a
certified public accountant or public accountant of a forecast or projection,
the support underlying the assumptions in the forecast or projection, whether
the presentation of the forecast or projection is in conformity with
professional presentation guidelines, or whether the assumptions in the
forecast or projection provide a reasonable basis for the forecast or
projection.
(h) "Person" means any
natural person, corporation, partnership, or other entity.
(i) "Review of a financial statement" means
to perform inquiries and analytical procedures that permit a certified public
accountant or public accountant to determine whether there is a reasonable
basis for expressing limited assurance that there are no material modifications
that should be made to financial statements in order for them to be in
conformity with generally accepted accounting principles or, if applicable,
with another comprehensive basis of accounting.
(2) A licensee shall neither pay any
consideration or commission to obtain a client nor accept any consideration or
commission when the licensee or the licensee's firm also performs for that
client the services listed in T.C.A. §
62-1-122(a)(1) through
(a)(3). This prohibition applies during the
period in which the licensee is engaged to perform any of the listed services
and the period covered by any historical financial statements involved in such
listed services.
(3) A licensee who
is not prohibited by this rule from performing services or receiving
consideration or a commission and who is paid or expects to be paid
consideration or a commission shall disclose that fact, in compliance with the
requirements of T.C.A. §
62-1-122 and Rule 0020-03-.06, to
any person to whom the licensee recommends or refers a product or service to
which the commission or consideration relates.
(4) Any licensee who accepts consideration or
a commission for a referral shall disclose such acceptance or payment to the
client in compliance with the requirements of T.C.A. §
62-1-122 and Rule
0020-03-.06.
(5) A licensee shall
not receive or agree to receive a contingent fee from a client for the
following:
(a) Performance of any
professional services for a client for whom the licensee or person associated
with the licensee performs ny of the
services listed in T.C.A. §
62-1-123(b)(1)(A) through
(C); or
(b) Preparation of an original tax return.
This prohibition applies during the period in which the
licensee is engaged to perform any of the listed services and the period
covered by any historical financial statements involved related to such
services.
(6)
Any licensee who accepts or agrees to accept a contingent fee shall disclose
the terms of such contingent fee to the client in compliance with the
requirements of Tenn. Code Ann. §
62-1-123 and Rule
0020-03-.06.
(7) Nothing in this
rule shall be construed to prohibit:
(a)
Payments for the purchase of all, or a part, of an accounting
practice;
(b) Retirement payments
to persons formerly engaged in the practice of public accountancy or payments
to the heirs or estates of such persons; or
(c) Payments, including incentive or bonus
payments, to employees or members of an accounting firm as compensation for
their services.
Authority: T.C.A. §§
62-1-105,
62-1-111,
62-1-122 and 62-1-123.
