What must a CPA do if he pays a referral fee to obtain a client?

When a CPA pays a referral fee to obtain a client, transparency is crucial in maintaining ethical standards and trust in the professional relationship. Disclosing the referral fee to the client ensures that the client is fully informed about any potential conflicts of interest or financial incentives that may affect the CPA's judgment or advice. This disclosure aligns with the ethical principles of honesty and integrity, which are fundamental to the CPA profession.

By informing the client about the referral fee, the CPA not only upholds professional ethical standards but also fosters trust and transparency in the client relationship. This practice allows clients to make informed decisions based on the full scope of the CPA's financial interactions and reinforces the CPA's commitment to ethical practices.

Other choices do not address the need for transparency appropriately. Keeping the fee confidential would compromise trust and could lead clients to feel misled. Refusing to work with the client does not address the ethical responsibility of disclosure, and deducting the referral fee from the client's bill could be misleading without explaining the nature of the fee to the client. Therefore, disclosing the referral fee is the most ethical and transparent course of action a CPA can take.