Texas Administrative Code › Title 22 - EXAMINING BOARDS › Part 22 - TEXAS STATE BOARD OF PUBLIC ACCOUNTANCY › Chapter 501 - RULES OF PROFESSIONAL CONDUCT › Subchapter C - RESPONSIBILITIES TO CLIENTS › Section 501.72 - Contingency Fees

Current through Reg. 49, No. 28; July 12, 2024
(a) A person shall
				  not perform for a contingent fee any professional accounting services or
				  professional accounting work for, or receive such a fee from, a client for whom
				  the person performs professional accounting services or professional accounting
				  work requiring independence under §
										501.70 of
				  this chapter (relating to Independence).
(b) A person shall not prepare an original or
				  amended federal, state, local or other jurisdiction tax return for a contingent
				  fee for any client during the period in which the person is engaged to perform
				  any of the services referenced by subsection (a) of this section and the period
				  covered by any historical or prospective financial statements involved in any
				  of the referenced services. Fees are not contingent if they are fixed by courts
				  or governmental entities acting in a judicial or regulatory capacity, or in tax
				  matters if determined based on the results of judicial proceedings or the
				  findings of governmental agencies acting in a judicial or regulatory capacity,
				  or if there is a reasonable expectation of substantive review by a taxing
				  authority.
(c) A person shall not
				  perform an engagement as a testifying accounting expert for a contingent fee. A
				  testifying accounting expert is one that at any time during the proceeding
				  becomes subject to disclosure and discovery under the procedural rules of the
				  forum where the matter for which his services were engaged is
				  pending.
(d) The prohibitions
				  outlined in subsections (a) and (b) of this section apply during any period in
				  which the person is engaged to perform any of the services referenced by
				  subsections (a) and (b) of this section, and the period covered by any
				  historical or prospective financial statements involved in any of the
				  referenced services.
(e)
				  Interpretive Comment: A consulting accounting expert may become a testifying
				  accounting expert when the client for whom he is working makes his work
				  available to a testifying expert. A consulting accounting expert who is working
				  on a contingent fee basis should work closely with his client to ensure that he
				  does not inadvertently become a testifying expert through the actions of his
				  client. An accounting expert may not accept a contingent fee for part of an
				  engagement and a set fee for part of the same engagement. A consulting
				  accounting expert who becomes a testifying expert may not accept a contingent
				  fee for the part of his work done as a consultant, but must be compensated on a
				  set fee basis for all of the work performed on the same engagement. A
				  consulting accounting expert who enters into a contingent fee engagement should
				  reach an agreement, preferably in writing, with the client as to how he will be
				  compensated should he become a testifying expert prior to beginning the
				  engagement.