Your Input Sought on Potential Changes to Rule 216


The CPA profession has established a Unified Rules Standing Committee that is seeking to harmonize the CPA Rules of Professional Conduct so that they are consistent across Canada. The committee is made up of representatives from the provincial and national CPA bodies. One of the Rules the committee is seeking to harmonize is Rule 216, Payment or Receipt of Commissions. To that end, the committee has compiled a draft new rule, for consideration by the profession. The potential new rule, if adopted, would significantly change the profession’s restrictions around commissions.

CPA Alberta is seeking member feedback regarding the potential changes to Rule 216. To assist us in this effort, we ask that you send any comments or questions you have regarding the potential changes by email to feedback@cpaalberta.ca. Your feedback is required by March 30, 2018.

Your feedback will be used to help CPA Alberta provide its response to the standing committee. If the final recommendation from provincial CPA bodies is to proceed with the rule changes, a member vote on the changes will then take place in each province.

See below for information on the current rule and potential changes.

Overview of current Rule and proposed changes

Current Rule

The existing Rule prohibits members and firms who are engaged in the practice of public accounting or providing accounting services to the public (both referred to as “public accounting” for the purpose of this Rule) from either paying or receiving commissions or other types of compensation either directly or indirectly (with the exception of commissions related to the sale of an accounting practice).

Rule 216 as it stands in Alberta’s Rules of Professional Conduct

216.1

(a) Other than in relation to the sale and purchase by a member or firm of an accounting practice, a registrant engaged or employed in a professional or public accounting practice shall not directly or indirectly pay, in relation to obtaining a client, a commission or other compensation to any person who is not an employee of the firm or who is not another registrant engaged or employed in a professional or public accounting practice.

(b) Other than in relation to the sale and purchase by a registrant of an accounting practice, a registrant engaged or employed in a professional or public accounting practice shall not accept directly or indirectly from any person who is not engaged or employed in a professional or public accounting practice a commission or other compensation for a referral to a client of products or services of others.

(c) A registrant engaged or employed in a professional or public accounting practice that pays or receives any commission or other compensation that may be permitted in accordance with paragraphs (a) or (b), shall:

(i) disclose the relevant facts about the commission or other compensation to; and

(ii) obtain consent to the commission or other compensation from, the client in relation to the transaction giving rise to the commission or other compensation.

216.2 

A registrant who is not engaged or employed in a professional or public accounting practice may directly or indirectly pay or receive a commission or other compensation in relation to the referral of products or services of others, provided that the registrant complies with the provisions of Rule 207, including those related to disclosure and consent, and with all other applicable laws and regulations that govern the payment or receipt of any such commission or other compensation.

Potential Rule

View Full Draft Rule

A national CPA working group is recommending a change to Rule 216 that will allow a broader range of commissions to be offered or accepted.

The potential Rule would adopt a threats and safeguards framework that applies to all CPAs and firms providing professional services as defined in the CPA Rules. The potential rule would still prohibit a member and/or firm from paying or receiving commissions or referral fees for the provision of assurance services, and for the provision of other professional services to a client for whom the member or firm also provides assurance services.

However, in all other situations where members or firms provide professional services, a threats and safeguards approach would be taken, with a minimum requirement for client consent, unless the threat is clearly insignificant. “Consent” is defined in the potential rule to mean “fully informed and voluntary consent given in writing, after disclosure of sufficient information and with sufficient time to make a knowledgeable decision.” Depending on the situation, additional safeguards may be required.

Members and firms in public accounting would continue to be allowed to pay or receive commissions in receipt of the purchase or sale of a public accounting practice – the only exception in place to the prohibition of commissions under the current rule.


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