RubinBrown Team Member Manual

POLICY CONTINUED Policy Title: Policy Number:

Section: Engagement Acceptance – Litigation Support and Valuation Services 1201 Risk Management

CLOSELY-HELD ATTEST CLIENTS: Engagement acceptance for companies that are closely-held, and thus not currently subject to the provisions of The Sarbanes Oxley Act or the SEC’s Auditor Independence rules, are still subject to the provisions of the AICPA’s auditor independence rules under Rule 101-3. This rule prohibits the performance of litigation support or valuation services for attest clients in the following circumstances: 1. Where the outcome of our work has an impact on the company’s financial statements. This could happen in instances where the financial statement incorporates the results of a valuation. Any such assignment must be referred to an independent third party valuation expert. Such engagements include, but are not limited to the following: • Allocation of purchase price (in compliance w/ ASC); • Goodwill Impairment testing (in compliance w/ ASC); • Valuation of ESOP stock, where the value of the shares has a material impact on the company’s financial statements; • Corporate stock redemption. 2. Similar to the provisions under the Sarbanes Oxley Act, Rule 101-3 allows valuation services that are performed for nonfinancial statement purposes, such as tax planning or tax compliance, estate and gift taxation and divorce proceedings. 3. Where we would be acting as an advocate for an attest client. In addition, while not expressly prohibited by Rule 101-3, accepting an engagement in connection with a litigation matter concerning a client has the potential to be a perceived conflict of interest. For that reason, approval to proceed on the following engagements must be specifically approved by BAS Service Unit Leader, the Risk Management Chair and/or the Managing Partner: 1. Any assurance or tax client is involved in litigation with a Third Party 2. Any assurance or tax clients that have internal disputes (i.e. dissenting or minority shareholder suits or divorce proceeding) 3. Divorce of any tax clients where RubinBrown works for the benefit of both (i.e. joint return) In accepting such engagements, we must preserve our independence and integrity by always remembering that as experts we are advocates of our opinions, be they valuation opinions or damage opinions, and not advocates of the particular attest client. Proposals and Engagement Letters: The Litigation and Valuation Groups have developed standard proposal language as well as standard language for engagement letters. These templates must be used as a starting point for any proposals or engagement letters. Proposals are to be used in cases where we have not yet reached a verbal agreement with the prospective client to use our services. Thus, the language of the proposal outlines the capabilities of RubinBrown in the relevant service area, perhaps highlighting specific experience that could be brought to bear on a particular client need. Engagement letters are to be used when we have reached a verbal agreement with the client to use our services, and thus the engagement letter serves to document this agreement. As such, the language of the engagement letter must be limited to summarizing our responsibilities and services to be provided, as well as the responsibilities of the client to provide information, payment of fees, and other responsibilities specific to the engagement. There must not be any language in the engagement letter that attempts to demonstrate RubinBrown’s ability to perform the given project (eg, “we will perform our valuation work to the highest professional standards”). All engagement letters must have attached to them “RubinBrown Engagement Terms”.

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