Tennessee § 62-1-122 - Payments to obtain clients or for referrals.

§ 62-1-122. Payments to obtain clients or for referrals.

A licensee shall neither pay any consideration or commission to obtain a client nor accept any consideration or commission for the referral of a client to others when the licensee or the licensee's firm also performs for that client any of the following: An audit or review of a financial statement; A compilation of a financial statement when the licensee expects, or reasonably might expect, that a third party will use the financial statement and the licensee's compilation does not disclose a lack of independence; or An examination of prospective financial information. The prohibition in subdivision (a)(1) applies during the period in which the licensee is engaged to perform any of the services listed in subdivision (a)(1) and the period covered by any historical financial statements involved in the services listed in subdivision (a)(1). A licensee who is not prohibited by subdivision (a)(1) from performing services or receiving consideration or a commission and who is paid or expects to be paid consideration or a commission shall disclose that fact in compliance with the requirements of this section to any person who the licensee recommends or refers a product or service to which the commission relates. Any licensee who accepts consideration or a commission for a referral shall disclose the acceptance or payment to the client in compliance with the requirements of this section. The board shall promulgate regulations specifying the terms of the disclosures required by subsections (b) and (c) and the manner in which the disclosures shall be made. The regulations shall comply with the following: The disclosure must be in writing and be clear and conspicuous; The disclosure must state the amount of the consideration or commission or must state the basis on which it will be computed; and The disclosure must be made at or prior to the time of the recommendation or referral of the product or service for which consideration or commission is paid or prior to the client retaining the licensee to whom the client has been referred for which a referral fee is paid. Nothing in this section shall be construed to prohibit: Payments for the purchase of all, or a part, of an accounting practice; Retirement payments to persons formerly engaged in the practice of accountancy or payments to the heirs or estates of those persons; or Payments, including incentive or bonus payments, to employees or members of an accounting firm as compensation for their services. Acts 1990, ch. 927, § 3; 1994, ch. 674, § 25; 1997, ch. 68, § 10; 1998, ch. 700, § 11.