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A CPA firm performs the annual audit of The Leahy Group, a private company. Leahy asks the firm to determine whether the company would qualify

A CPA firm performs the annual audit of The Leahy Group, a private company. Leahy asks the firm to determine whether the company would qualify for certain municipal tax credits and prepare the application. The firm will receive 15% of any tax credits that Leahy obtains as a result of the requested credits; if the request is denied, no fees will be due. Leahy expects city officials to perform a substantive review of its client's application. Which statement best describes why this fee arrangement would be a permissible contingent fee arrangement under the AICPA Code of Professional Conduct?

The contingent fee relates to tax (nonattest) services.

The contingent fee of 15% is a relatively small portion of the potential tax credit.

The firm expects the city to perform a substantive review of Leahy's application. The firm does not expect the contingent fee to be material on any level.

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