In which one of the following situations would a CPA be in violation of the AICPA Code of Professional Conduct in determining a fee?
A)A fee based on whether the CPA's report on the client's financial statements results in the approval of a bank loan.
B)A fee based on an estimate of the number of hours needed to complete the engagement by auditors of various levels of experience.
C)A fee based on the nature of the service rendered and the CPA's particular expertise instead of the actual time spent on the engagement.
D)A fee based on the fee charged by the prior auditor.

Question

Quizplus · Accepted Answer

A fee based on whether the CPA's report on the client's financial statements results in the approval of a bank loan would suggest a contingency fee, which violates the AICPA Code of Professional Conduct. CPAs cannot accept fees that are based on a particular result or outcome of their work.

In Which One of the Following Situations Would a CPA