Summer 2025

On April 3, 2025, at a town hall, the AICPA made a dramatic announcement: with the issuance of Statements on Standards for Accounting and Review Services (SSARS) No. 27, “A new era of client advisory services” has been launched. The crux of this not-so-subtle claim is that most firms will move their client advisory services practice out of their assurance services and into their advisory and consulting area, where it will fall under the consulting services standards (promulgated in the Statement on Standards for Consulting Services, or SSCS).

SSARS No. 27, Applicability of AR-C Section 70 to Financial Statements Prepared as Part of a Consulting Services Engagement, has a very long title but may well be the shortest SSARS ever issued in its 47 years of existence. But the ripples from this pebble may be more like enormous waves. It finally permits, essentially, the “plain paper financial statement” service.

The standard has added an exemption of the AR-C Section 70 preparation services when an accountant prepares either historical financial statements or prospective financial information, “as part of a consulting services engagement performed in accordance with CS Section 11, Consulting Services: Definitions and Standards, in which the preparation of financial statements is not the primary objective of the engagement.”

Accordingly, it is easy to conclude that prepared financial information or statements, which are fundamentally managerial tools to illustrate financial results, positions, or future prospects, would constitute advisory or consulting services.

Preparation services were established with SSARS 21 of 2014 as a bridge service in conjunction with overall clarified accounting standards (auditing standards were “clarified” in 2010) and technical corrections to 2010’s SSARS 19 (which itself was a thorough rewrite of the SSARS). SSARS 21 intended to recognize the modernization of accounting software that had programmed capabilities to assign all accounts within a general ledger to a financial statement line number, thus allowing the software to “prepare” financial statements directly. Further, SSARS 21 intended to solve the following matters:

• Members in public accounting were required to report (audit, review, or compilation) whenever a financial statement was prepared/presented, establishing a financial statement engagement irrespective of whether that was what the client wanted. SSARS 21 established engagement-only-driven responsibilities.
• The no-report compilation created in SSARS 8 was a restricted, internal-use-only financial statement, which created more problems and dilemmas than it resolved.
• Finally, there were no specific carve-outs when a financial statement was used solely in conjunction with another professional service, whether that was another attest or assurance engagement, in tax compliance reporting, in personal financial planning, for valuation purposes, or litigation matters.

While the preparation engagement did facilitate some expediency in providing small-business owners and management with timely performance statements from which managerial decisions could be made, the AR-C Section 70 preparation service still fell within the SSARS engagement services that necessitated professional expertise in the assurance services area, as well as assurance-practice-type compliance requirements. These include subjectivity to a system of quality control (replaced in 2025 with the new Quality Management Standards system), possible engagement inclusion in professional peer reviews, and the possibility (even if remote) of potential litigation exposure from engagement-creep assertions.

Mega Reemergence of CAS

Way, way back in the day, accountants were relied upon as the No. 1 internal control and financial safety net. Accounting software has made data documentation and general ledger capabilities easier and immediate. However, the integrity of the financial message reported and communicated by the software will always be limited to the capabilities and understanding of the person overseeing and monitoring accounting data input. For example, most accountants have seen a client’s QuickBooks file that contained clear and discernible mistakes, such as negatives in accounts that should never have a negative balance.

Since COVID-19 and the explosion of remote services, client accounting services (CAS) experienced an extraordinary uptick. The technology and connectedness arising from remote work allowed accountants to quickly and expediently assist with making financial reporting data meaningful, clear, and even interpretive so as to guide owners and managers with financial decision-making.

With the goal to facilitate CAS services in which controllership or CFO services were performed under the consulting standards, financial statements would be created as a part of those services. Because financial statement preparation is not an attest service, the AICPA’s Accounting and Review Services Committee determined that excluding such engagements from AR-C Section 70 would not adversely affect the public interest.

As a service under CS 100, however, it would still require the general standards of professional competence, due professional care, planning and supervision, and sufficient relevant data to apply, pursuant to the AICPA Code of Professional Conduct. In a consulting service, the practitioner develops the findings, conclusions, and recommendations presented. The nature and scope of work is determined solely by expectations agreed upon between the practitioner and the client for the use and benefit of the client.

A&A Implications

There are two major implications to accounting and auditing (A&A).

First, while AR-C Section 70 preparations did not trigger peer review enrollment, a firm or practitioner already subject to peer review due to other Statements on Auditing Standards, SSARS, or even Statements on Standards for Attestation Engagements would include the preparation in the pool of peer reviewed engagements. Engagements under consulting services, however, are completely excluded from peer review.

Second, SSARS 26, Quality Management for an Engagement Conducted in Accordance with Statements on Standards for Accounting and Review Services, issued in 2022, established that all engagements under the SSARS must be performed within the new Quality Management Standards (QMS) and adopted, implemented, and applied by Dec. 15, 2025. Accordingly, financial statement engagements that could now be performed under the consulting services standards would be exempted from QMS application.

The A&A exclusions detailed above result in an incredible game-changer for practitioners and firms providing these financial statements in conjunction with advisory and consulting services. SSARS 27 becomes effective for the preparation of financial statements for periods ending on or after Dec. 15, 2026. Early implementation is permitted.

Final Thoughts

There appears no reason why SSARS 27 shouldn’t be implemented as soon as possible. Further, an accountant may voluntarily apply certain requirements of AR-C Section 70. For example, to address the risk that users of the entity’s financial statements may be misled by the practitioner’s perceived association with the financial statements, the accountant may include the statement “no assurance is provided” on the financial statements. The inclusion of such a statement does not result in the accountant being required to perform the engagement in accordance with AR-C Section 70. 

On April 3, 2025, at a town hall, the AICPA made a dramatic announcement: with the issuance of Statements on Standards for Accounting and Review Services (SSARS) No. 27, “A new era of client advisory services” has been launched. The crux of this not-so-subtle claim is that most firms will move their client advisory services practice out of their assurance services and into their advisory and consulting area, where it will fall under the consulting services standards (promulgated in the Statement on Standards for Consulting Services, or SSCS).

SSARS No. 27, Applicability of AR-C Section 70 to Financial Statements Prepared as Part of a Consulting Services Engagement, has a very long title but may well be the shortest SSARS ever issued in its 47 years of existence. But the ripples from this pebble may be more like enormous waves. It finally permits, essentially, the “plain paper financial statement” service.

The standard has added an exemption of the AR-C Section 70 preparation services when an accountant prepares either historical financial statements or prospective financial information, “as part of a consulting services engagement performed in accordance with CS Section 11, Consulting Services: Definitions and Standards, in which the preparation of financial statements is not the primary objective of the engagement.”

Accordingly, it is easy to conclude that prepared financial information or statements, which are fundamentally managerial tools to illustrate financial results, positions, or future prospects, would constitute advisory or consulting services.

Preparation services were established with SSARS 21 of 2014 as a bridge service in conjunction with overall clarified accounting standards (auditing standards were “clarified” in 2010) and technical corrections to 2010’s SSARS 19 (which itself was a thorough rewrite of the SSARS). SSARS 21 intended to recognize the modernization of accounting software that had programmed capabilities to assign all accounts within a general ledger to a financial statement line number, thus allowing the software to “prepare” financial statements directly. Further, SSARS 21 intended to solve the following matters:

• Members in public accounting were required to report (audit, review, or compilation) whenever a financial statement was prepared/presented, establishing a financial statement engagement irrespective of whether that was what the client wanted. SSARS 21 established engagement-only-driven responsibilities.
• The no-report compilation created in SSARS 8 was a restricted, internal-use-only financial statement, which created more problems and dilemmas than it resolved.
• Finally, there were no specific carve-outs when a financial statement was used solely in conjunction with another professional service, whether that was another attest or assurance engagement, in tax compliance reporting, in personal financial planning, for valuation purposes, or litigation matters.

While the preparation engagement did facilitate some expediency in providing small-business owners and management with timely performance statements from which managerial decisions could be made, the AR-C Section 70 preparation service still fell within the SSARS engagement services that necessitated professional expertise in the assurance services area, as well as assurance-practice-type compliance requirements. These include subjectivity to a system of quality control (replaced in 2025 with the new Quality Management Standards system), possible engagement inclusion in professional peer reviews, and the possibility (even if remote) of potential litigation exposure from engagement-creep assertions.

Mega Reemergence of CAS

Way, way back in the day, accountants were relied upon as the No. 1 internal control and financial safety net. Accounting software has made data documentation and general ledger capabilities easier and immediate. However, the integrity of the financial message reported and communicated by the software will always be limited to the capabilities and understanding of the person overseeing and monitoring accounting data input. For example, most accountants have seen a client’s QuickBooks file that contained clear and discernible mistakes, such as negatives in accounts that should never have a negative balance.

Since COVID-19 and the explosion of remote services, client accounting services (CAS) experienced an extraordinary uptick. The technology and connectedness arising from remote work allowed accountants to quickly and expediently assist with making financial reporting data meaningful, clear, and even interpretive so as to guide owners and managers with financial decision-making.

With the goal to facilitate CAS services in which controllership or CFO services were performed under the consulting standards, financial statements would be created as a part of those services. Because financial statement preparation is not an attest service, the AICPA’s Accounting and Review Services Committee determined that excluding such engagements from AR-C Section 70 would not adversely affect the public interest.

As a service under CS 100, however, it would still require the general standards of professional competence, due professional care, planning and supervision, and sufficient relevant data to apply, pursuant to the AICPA Code of Professional Conduct. In a consulting service, the practitioner develops the findings, conclusions, and recommendations presented. The nature and scope of work is determined solely by expectations agreed upon between the practitioner and the client for the use and benefit of the client.

A&A Implications

There are two major implications to accounting and auditing (A&A).

First, while AR-C Section 70 preparations did not trigger peer review enrollment, a firm or practitioner already subject to peer review due to other Statements on Auditing Standards, SSARS, or even Statements on Standards for Attestation Engagements would include the preparation in the pool of peer reviewed engagements. Engagements under consulting services, however, are completely excluded from peer review.

Second, SSARS 26, Quality Management for an Engagement Conducted in Accordance with Statements on Standards for Accounting and Review Services, issued in 2022, established that all engagements under the SSARS must be performed within the new Quality Management Standards (QMS) and adopted, implemented, and applied by Dec. 15, 2025. Accordingly, financial statement engagements that could now be performed under the consulting services standards would be exempted from QMS application.

The A&A exclusions detailed above result in an incredible game-changer for practitioners and firms providing these financial statements in conjunction with advisory and consulting services. SSARS 27 becomes effective for the preparation of financial statements for periods ending on or after Dec. 15, 2026. Early implementation is permitted.

Final Thoughts

There appears no reason why SSARS 27 shouldn’t be implemented as soon as possible. Further, an accountant may voluntarily apply certain requirements of AR-C Section 70. For example, to address the risk that users of the entity’s financial statements may be misled by the practitioner’s perceived association with the financial statements, the accountant may include the statement “no assurance is provided” on the financial statements. The inclusion of such a statement does not result in the accountant being required to perform the engagement in accordance with AR-C Section 70.