Reviewer glossary

Short definitions, each with the official source it rests on.

F

Form 1099-NECUS rule. Form 1099-NEC is the IRS form used to report nonemployee compensation.
Form W-8BENUS rule. Form W-8BEN is the IRS certificate of foreign status of beneficial owner for United States tax withholding and reporting, for individuals.
Freelance and contractor glossary hubThis glossary explains terms that come up when an accountant works for themselves: worker status, contract terms, US tax forms, confidentiality,...

RetainerA retainer is a fee paid in advance to reserve or pay for future services.

Utilisation rateUtilisation rate is the share of your available working time spent on billable work: billable hours divided by available hours.

Change orderA change order is a written instruction or agreement that changes the scope, price or timing of work already agreed.
Common-law testDefinition of the IRS common-law test and its three categories of evidence: behavioural control, financial control, type of relationship.
Common-law testUS rule. The common-law test is how federal tax law decides whether a worker is on a payroll or independent.
Contingent feeUS rule. A contingent fee is a fee that depends on the outcome: paid only if a specified result is achieved, or set by reference to the result.

Scope creepScope creep is growth in the work beyond what was agreed, without a matching change in price or deadline.
Section 7216US rule. Section 7216 of the Internal Revenue Code makes it a misdemeanour for a covered tax return preparer to knowingly or recklessly disclose, or...
Section 7216Section 7216 of the Internal Revenue Code: the US rule that limits how a tax return preparer may disclose or use information furnished for a return.
Self-employment taxUS rule. Self-employment tax is the Social Security and Medicare tax paid by self-employed people.
Statement of workA statement of work is the written description of what an engagement covers: what is delivered, by when, to what standard, and what is left out.
Substantial equivalencyUS rule. Substantial equivalency is a term used in CPA licensure and mobility discussions, and NASBA lists it as its own topic alongside CPA mobility.

Net 30Net 30 is a payment term that makes an invoice due 30 days after a stated start date, usually the invoice date.
Net 30Net 30 is a payment term meaning the invoice is due 30 days after a start point.

Engagement teamUS rule. In professional standards, the engagement team means the people who perform an engagement, and professional codes define it precisely for...
Errors and omissionsErrors and omissions, often shortened to E&O, is a name commonly used for professional liability cover.
Errors and omissionsErrors and omissions, or E&O, is liability cover for professionals against claims of loss from services they perform for others, per the NAIC.
Estimated taxUS rule. Estimated tax is how people pay tax during the year when no one withholds it for them, such as self-employed people.

ABC testUS rule. The ABC test is a worker-classification test found in some state laws, named for the lettered conditions in the statute.
Acts discreditableUS rule. Acts discreditable is the name professional codes give to a general rule against conduct that brings discredit on the profession.

Independence in fact and in appearanceUS rule. Independence is commonly described in two parts.
Independent contractorDefinition of an independent contractor under the IRS general rule, with the US label and the point that a title does not decide status.
Independent contractorAn independent contractor provides services as their own business instead of on someone's payroll.

MisclassificationDefinition of misclassification and why the label on a worker does not settle which test applies.
MisclassificationMisclassification means treating a worker as an independent contractor when the law's tests cover the relationship as employment.

Practice mobilityUS rule. Practice mobility refers to laws that let CPAs in good standing serve clients in other states without getting a second licence, if certain...
Professional liability insuranceProfessional liability insurance is cover for claims that your professional work was negligent or fell short of what a client was entitled to expect.
Professional liability insuranceProfessional liability insurance covers a professional against claims of loss from services they perform for others, as the NAIC defines it.

WorkpapersWorkpapers are the records of work done on an engagement: what was tested or prepared, the evidence, and the conclusions.