ARE CONTINGENT FEES PERMITTED WITH APPROPRIATE SAFEGUARDS UNDER IFAC?
Really?
MCQ from WTB:
With respect to the acceptance of contingent fees for professional services, the IFAC Code of Ethics for Professional Accountants indicates that the accounting firm:
a. May accept contingent fees for all types of engagements.
b. Should establish appropriate safeguards around acceptance of a contingent fee.
c. Should not accept contingent fees.
d. Should accept contingent fees only for assurance services other than audits of FS.
Choice B is correct. The IFAC Code indicates that if the contingent fee presents a threat to apply fundamental principles, the firm should establish appropriate safeguards.
A is incorrect because the IFAC Code does not contain these provisions.
C is incorrect because a contingent fee may be accepted if threats can be reduced to an acceptable level.
D is incorrect because the IFAC Code does not contain these provisions.
From Becker's AUD-B p. A6-27, only the ff. services are permitted with appropriate safeguards per IFAC, in which I formed my own mnemonic, “BAILED”
B – Broker
A – Actuarial
I – Internal audit, Investment banker/advisor, Info-Financial Information systems design & Implementation
L – Legal
E – Expert services
D – Dealer
.