Section 17-2510. CODE OF PROFESSIONAL CONDUCT: INDEPENDENCE, INTEGRITY, AND OBJECTIVITY STANDARDS

 

2510.1A licensee shall not permit his or her name to be associated with financial statements of an enterprise when the association would imply that the licensee is acting as an independent certified public accountant to the enterprise unless he or she is independent.

 

2510.2A licensee shall not claim independence if, during the period of a professional engagement or when expressing an opinion, the licensee did any of the following:

 

(a)Had or was committed to acquire any direct or material indirect financial interest in the enterprises;

 

(b)Was a trustee of any trust, or executor or administrator of any estate, if the trust or estate had or was committed to acquire any direct or material indirect financial interest in the enterprise;

 

(c)Had any joint, closely held business investment with the enterprise or with any officer, director, or principal stockholder of the enterprise which was material in relation to the net worth of either the licensee or the enterprise; or

 

(d)Had any loan to or from the enterprise or any officer, director, or principal stockholder of the enterprise other than loans of the following kinds made by a financial institution under normal lending procedures, terms, and requirements:

 

(1)Loans obtained by the licensee that are not material in relation to the net worth of the borrower;

 

(2)Home mortgage; and

 

(3)Other secured loans, except those secured solely by guarantee of the licensee.

 

2510.3A licensee shall not claim independence if, during the period covered by the financial statements or the professional engagement, or when expressing an opinion, the licensee was as follows:

 

(a)Connected with the enterprise as a promoter, underwriter, voting trustee, director or officer, or in any capacity equivalent to that of a member of management or of an employee; or

 

(b)A trustee for any pension or profit-sharing trust of the enterprise.

 

2510.4A licensee shall not, in the performance of professional services, knowingly misrepresent facts or subordinate his or her judgment to others.

 

2510.5In tax practice, a licensee may resolve doubt in favor of his or her client as long as there is reasonable support for the position.

 

2510.6A licensee shall not receive a commission from any party for recommending to a client any product or service when the licensee also performs for that client:

 

(a)An audit or review of a financial statement;

 

(b)A compilation of a financial statement when the licensee expects, or reasonably might 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.

 

2510.7The provisions of § 2510.6 shall not prohibit the following payments:

 

(a)Payments for the purchase of all, or a material part, of an accounting practice;

 

(b)Retirement payments to persons formerly engaged in the practice of public accountancy; or

 

(c)Payments to the heirs or estate of persons formerly engaged in the practice of public accountancy.

 

2510.8Any licensee who is paid or expects to be paid a non-prohibited commission for referring products or services to a client shall disclose such commission to a client.

 

2510.9Any licensee who accepts a referral fee from another licensee for recommending or referring any service of a licensee to any person or entity, or who pays a referral fee to another licensee to obtain a client, shall disclose such acceptance of or payment of a referral fee to the client.

 

2510.10A licensee shall not:

 

(a)Perform any professional services for a contingent fee or receive a contingent fee from a client for whom the licensee or the licensee’s firm performs;

 

(1)An audit or review of a financial statement;

 

(2)A compilation of a financial statement when the licensee expects, or reasonably might expect, that a third party will use the financial statement and the licensee’s compilation report does not disclose a lack of independence; or

 

(3)An examination of prospective financial information.

 

(b)Prepare an original or amended tax return or claim for a tax refund for a contingent fee for any client.

 

2510.11The prohibition in § 2510.6 applies during the period in which the licensee is engaged to perform any of the services listed in § 2510.10 and the period covered by any financial statements involved in any such listed services.

 

2510.12Unless otherwise allowed by this chapter or the Act, a licensee may not enter into a contingent fee agreement.

 

2510.13A contingent fee agreement exists when the licensee’s fee for services depends upon the findings or results of the licensee’s services.

 

2510.14A fee is not a contingent fee if a court or other public authority fixes the fee, or, in tax matters, if the fee is based upon the results of judicial proceedings or the findings of governmental agencies.

 

2510.15A licensee may vary fees, for reasons such as the complexity of services rendered, and such variation is not considered a contingent fee.

 

source

Final Rulemaking published at 51 DCR 4401 (April 30, 2004).