Question
David had a client, Steve who quit his job and purchased a non-profit facility. David was not comfortable in advising and dealing with the accounting
David had a client, Steve who quit his job and purchased a non-profit facility. David was not comfortable in advising and dealing with the accounting issues unique to non-profits and consequently referred Steve to Shelley, a CPA who specialized in non-profits. David was impressed with Shelley's knowledge and engaged her. Shelley was appreicative and paid David a percentage of her first year billings earned from Steve.
Two years later, David decided to retire. Ally, a CPA expressed an interest in purchasing David's practice. She reviewed the billings generated from these clients and paid David a lump sum for his practice. David did not disclose the amounts he received from Shelley or Ally to Steve or his remaining clients. He did send a letter to his remaining clients, informing them that he was retiring and referring them to Ally. Was David's acceptance of these payments permitted by applicable professional rules?
Group of answer choices
A. Yes as to both
B. Yes, as to Shelley because David did not possess the requisite knowledge to handle Steve's case, but no as to Ally because it is a disguised referral fee
C. No as to Shelley, yes as to Ally
D. No as to both
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