Referral Fee for Local Accounting Firms

searcher profile

October 18, 2021

by a searcher from Ivey Business School at Western University in Toronto, ON, Canada

We've been reaching out to a lot of local accounting firms and several have replied that they want to get paid a referral fee for an introduction to one of their clients. This seemed to us like a conflict of interest, but since several have asked, we wanted to check with Searchfunder community. We'd obviously be fine paying a finder's fee to an industry consultant or just a well-connected local person, but an accountant taking a fee for an introduction to their client base seems like a conflict of interest (especially if not disclosed to the client and/or if they are already getting paid for work on the sell-side).

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commentor profile
Reply by a professional
from Seton Hall University in Morristown, NJ 07960, USA
I don't know if the rules changed, but the only transaction where I am aware that accountants are not allowed to accept a commission, is when they are offering "attestation services".Audits, reviews, certified reports where people are relying on the accountant's signature and assumed independence.You don't want the accountant providing you an audited financial statement while he's accepting a commission to broker a sale.I believe the commission rules came about circa Enron...
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Reply by a professional
from New York University in New York, NY, USA
I have no clue if it's permitted under the ethical rules for accountants, but it strikes me as sketchy. I know they can't have success-based fees for this (unless they're a broker dealer), and it would probably create a conflict for them in general. I would be very reluctant to pay this. (Also, as a note, attorneys are not permitted to pay such a fee so definitely never pay one to a lawyer.)
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