Lackey, CPAs, accepts a commission from Xue Corp., a financial statement review client, for referring Xue to an insurer. Which statement is accurate regarding commissions?
A.) The commission is permitted because Lackey does not perform an audit of Xue’s financial statement.
B.) The commission is prohibited because a review client paid the fee for Lackey’s referral of business to a third party.
C.) The commission is prohibited if the fee structure is material to Lackey and will be paid to Lackey over a period of time.
D.) The commission is prohibited if Lackey discloses to Xue that it will be receiving the fee.
The answer is The commission is prohibited because a review client paid the fee for Lackey’s referral of business to a third party