Is a success-based referral reward a contingent fee under AICPA 1.510?

Is a SourceX referral reward a contingent fee under 1.510?

Usually no, because 1.510 governs fees a CPA charges a client for the CPA's own services, and a SourceX reward is paid by SourceX out of its own fee. The rule that tests that reward is 1.520, commissions and referral fees. The two rules still overlap in practice, so a firm should run both checks before it introduces a client.

The AICPA Code defines a contingent fee as one whose amount depends on attaining a specific result, and bars members from performing services for a contingent fee for clients where the firm performs an audit or review, certain compilations, or an examination of prospective financial information. A state society resource also notes that a licensee may not receive a contingent fee for preparing an original or amended tax return, and that state rules can be stricter than the Code.

This is general information, not legal, tax or financial advice. Confirm with your own state board, the current AICPA Code and your firm's ethics counsel before acting.

What 1.510 covers and what it does not

Rule 1.510 looks at the fee your firm bills for its professional work. Ask one question: is any amount your client pays you tied to a result? If yes, 1.510 is in play.

A SourceX reward is a share of SourceX's collected fee. It is never deducted from what the company receives, and the company pays your firm nothing extra for the introduction. That is why the analysis moves to 1.520.

Where the two rules still touch

Three situations pull 1.510 back into the discussion even though the reward itself is not a client fee.

• A bundled engagement. If your firm offers to help the client with the data-licensing project and the fee depends on whether a license closes, you have created a result-dependent fee. Keep your engagement fees fixed or hourly and separate from any licensing outcome.
• Tax return work. A CPA preparing an original or amended return for the client should not link any part of that fee to a licensing result. Keep the return engagement fee independent of the introduction.
• Attest clients. For audit and review clients, both rules restrict the arrangement more tightly. The sibling guide on introducing an audit client covers that case.

A 3-question test before you introduce a client

Use this screen on each client, in this order.

1. Does any fee you charge this client depend on the licensing result, the licensing price or whether a deal closes? If yes, restructure the engagement or do not proceed.
2. Does your firm perform attest-type services for this client? If yes, treat acceptance of any reward as off the table until your state board and ethics counsel say otherwise.
3. Would you disclose the reward to the client in writing before the introduction? If you would not be comfortable doing so, do not accept it.

What your state board may add

States differ. Some adopt the AICPA rule by reference, some write their own statute, and some require written disclosure of commissions. Read the pages for Washington, California and New York if you practice there, and check your own board for any other state. For the question of whether the rules attach to the individual or the whole firm, see partner versus firm referral fee rules.

How the introduction works if you proceed

You make the introduction and never touch client records.

1. Confirm the client fits the published baseline: 50+ full-time employees at peak (contractors excluded), several years of documented operations, rights to license the data and an authorized sponsor. The company fit checker gives a preliminary, non-binding screen.
2. Document your 1.510 and 1.520 analysis in the client file.
3. Tell the owner or CFO about any reward in writing, then let them decide whether to apply.
4. The company works with SourceX on the inventory, price and terms. Nothing is binding until the company signs.

Partners earn 25% of the eligible platform fees SourceX actually collects from the referred company's licensing deals, capped at $100,000 cumulative per referred company. The reward is payable only after the buyer pays and SourceX receives its fee, and no reward is guaranteed. The program terms govern. A firm that concludes it cannot accept a reward can still decide whether to make an unpaid introduction.

Next step

Read the accountant overview, then register as a partner once your firm has cleared the rules. Clients can also apply directly at sourcex.si/apply.