The American Institute of CPAs’ Accounting and Review Services Committee has clarified the applicability of the standard related to financial statement preparation as part of a client advisory services (CAS) engagement, which is one of the fastest growing practice areas in the profession.
The newly issued Statement on Standards for Accounting and Review Services No. 27, Applicability of AR-C Section 70 to Financial Statements Prepared as Part of a Consulting Services Engagement, clarifies that a CPA is not required to apply AR-C Section 70, Preparation of Financial Statements, when the preparation of financial statements is not the primary objective of an engagement that is performed in accordance with CS section 100, Consulting Services: Definitions and Standards.
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Client advisory services, which include controllership and CFO services, have been an area of significant growth over the past several years. Many of these engagements entail an outside accountant taking on responsibilities that may include functioning as the client’s outsourced CFO.
In considering this clarification, ARSC determined that financial statements issued when a CS section 100 is performed present no harm to the users of that statement. The revised language clarifies that while not required to be applied, the accountant is not precluded from applying AR-C section 70, in whole or in part.
“Our goal is to ensure that accountants have the necessary knowledge, tools and resources to serve their clients efficiently and to the best of their ability,” said Sue Coffey, CPA, CGMA, CEO of Public Accounting for the AICPA. “As CAS grows as a service area, natural questions arise as to how to best apply certain standards. Clarifying these standards allows accounting professionals providing these valuable services to do so confidently.”
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Tags: Accounting, AICPA
