Attest client screen: which clients bar a CPA from accepting a commission

Why the client list needs screening first

Four engagement types bar a commission: an audit, a review, a compilation that a third party is expected to use where the report does not disclose a lack of independence, and an examination of prospective financial information. The bar sits in ET 1.520 of the AICPA Code of Professional Conduct. It reaches work done by the member or the member's firm, not only the partner who signs the report, and it covers both the engagement period and the period of the historical statements involved.

A referral reward from SourceX counts as a commission under the Code's definitions, as explained in commission or referral fee. So this screen comes before the first conversation with any client about licensing its data, not after the client has shown interest.

The attest client screen

Run the checklist for each legal entity separately. A parent, its subsidiaries and sister companies under common ownership can have different engagements with your firm. A ticked box is a finding, not a failure; the results table below says what each one means.

Engagements that bar a commission

• The firm audits this entity's financial statements.
• The firm reviews this entity's financial statements.
• The firm compiles statements that a lender, surety, investor or buyer is expected to use, and the compilation report does not disclose a lack of independence.
• The firm examines a forecast or projection prepared by this entity.

Timing of the bar

• One of the engagements above is in progress or has been accepted.
• The introduction, or the license it could lead to, falls within a fiscal period covered by statements in one of those engagements.
• A listed engagement is likely soon, for example because a loan covenant, a bonding requirement, a new investor or a sale process will call for reviewed or audited statements.

Who counts as the firm

• Another partner, office or service line performs a listed engagement for this entity.
• A network firm or affiliated entity performs attest work for it.
• Your practice operates in an alternative practice structure and you have not confirmed which entity holds the attest relationship; the guide to PE-backed CPA firms and APS covers that question.

Other attest and independence regimes

• The firm performs other attest work for the entity, such as SOC examinations or agreed-upon procedures. These are not among the four engagements summarized above, but they carry independence requirements of their own, so get a ruling from your independence partner.
• The entity, its parent or an affiliate is audited under SEC rules. SEC auditor-independence rules form a separate regime from the AICPA Code, as this SEC Office of the Chief Accountant letter to the AICPA ethics committee on contingent fees illustrates, so firms that audit SEC registrants must check those rules as well.

Firm and state overlays

• Your state board's rule matches the AICPA text or goes further; see the state-by-state rules.
• Firm policy allows partners to accept outside referral compensation.
• A written disclosure is ready for clients that pass; the page on how CPAs disclose referral fees has a model sequence.

How to read the results

If you serve the client as an outsourced finance lead through your firm, read whether the AICPA Code applies to a fractional CFO before relying on the tax-and-advisory row.

Red flags that end the screen early

• The client's banker receives your compiled statements every quarter, even though the engagement letter says management use only.
• A sale process is starting and the buyer will ask your firm for reviewed or audited statements.
• The company's records mostly belong to its own customers, as at an outsourced billing or claims processor, and those customers have not consented to licensing.
• The business peaked below the 50+ full-time employee mark (contractors excluded), or it deleted its archived systems and has nothing left to export.
• No one at the company has authority to sponsor a license: no owner, CEO, CFO or authorized representative willing to engage.

After a client passes the screen

1. Send the written disclosure and keep the client's acknowledgement in the permanent file.
2. Run a quick, non-binding read of fit in the company fit checker, without entering contact details.
3. Introduce the company through your referral link or the referral form, passing on basic facts only; you never export, upload or describe client records.
4. SourceX confirms size, history, data breadth and rights with the company's sponsor, and the company lists its systems in a data inventory.
5. The company agrees price and terms before buyers review anything, and signs only if those terms work.

Partners earn 25% of the eligible platform fees SourceX actually collects from the referred company's licensing deals, capped at $100,000 per referred company; rewards become payable only after the buyer pays and SourceX receives its fee, and no reward is guaranteed.

This is general information, not legal, tax or financial advice. Confirm with your own counsel, tax adviser or professional body before acting.

Next step

Screen your top ten advisory and tax clients against the checklist this month. For the ones that pass both the attest screen and the state rule, register as a partner and make the first introduction.