Unpaid Fees Might Impair Independence

Last Revision: 7/7/2020

During uncertain economic times, practitioners might have difficulties collecting their fees from clients. It’s possible that long-overdue fees might create a self-interest threat to your independence. We remind members of the following guidance in Rule 204.4 (36):

Fees — Overdue

A self-interest threat may exist if fees due from an assurance client for professional services remain unpaid for a long time, especially if a significant portion is not paid before the assurance report for the following year is issued. Generally, the payment of such fees should be required before that report is issued. The following safeguards may be applicable:

  • discussing the level of outstanding fees with the audit committee; and
  • involving another member of the firm who is not part of the engagement team, or a professional colleague who is not a member of the firm, to provide advice or review the work performed.

Members are cautioned that the overdue fees might create the same threats to independence as a loan to the client. Therefore, members should consider whether, because of the significance of such threats, it is appropriate for the firm to continue to provide assurance services to that client.

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