In 2026, CPA firms with advisory services will be offered flexibility under the new clarification from AICPA. That, CAAS providers, doesn’t necessarily require them to meet the strict compliance requirements under SSARS 27. Rather, they can categorize their advisory services under the regulations of CS 100, saving CAAS providers from an intensive administrative and documentation workload.
Financial statements preparation is a traditional, yet time-intensive, aspect of CAAS engagements. Preparing financial statements for a specific client can require between five and ten hours each month. This is especially true for small and complex clients, depending on their industry and the reporting standards of AR-C Section 70. Many of the CAAS services performed by such firms feel out of place when put together with the advisory services that form the real reason for an engagement.
The AICPA has ultimately chosen to tackle this issue. In 2025, the firm’s Accounting and Review Services Committee (ARSC) introduced Statement on Standards for Accounting and Review Services (SSARS) No. 27. This standard suggests an alternative approach to preparing financial statements that is related to advisory services. The development is noteworthy and conditional at the same time. CPA firms need to know its limits clearly before making any changes in their engagement letters and procedures for performing such engagements.
This blog aims to assist CPA firms in understanding the latest updates related to SSARS No. 27 and guide those offering CAAS services on how to apply these new standards effectively.
What Has Changed Under SSARS No. 27?
April 7, 2025, marked the issuance of SSARS No. 27, Applicability of AR-C Section 70 to Financial Statements Prepared as Part of a Consulting Services Engagement by the AICPA. This standard makes an amendment to AR-C Section 70, where it is clarified that AR-C Section 70 should not be utilized by the practitioner for preparing the financial statements. It does so when such preparation of financial statements is conducted as a part of a consulting service engagement pursuant to CS Section 100. The reason for such an amendment is that most CAAS engagements these days focus on providing ongoing financial advice and operations support services. They are less centred on simply preparing financial statements.
AR-C Section 70 Still Applies When Preparing Financial Statements as the Main Goal
One of the most important points to understand is that SSARS No. 27 does not replace or eliminate AR-C Section 70. The existing guidance under SSARS No. 21 continues to apply whenever a CPA is specifically engaged to prepare financial statements. If the main goal for the client is the creation of financial statements, firms are required to carry out the engagement in accordance with AR-C Section 70. They must also comply with its documentation and reporting requirements.
Advisory Engagements Can Be Governed by CS Section 100
The clarification primarily benefits CPA firms whose engagements revolve around advisory services rather than financial statement preparation. Services like outsourced controllership, CFO, budgeting, forecasting, financial process improvement, and consulting often involve generating financial statements. According to SSARS No. 27, where the generation of financial statements is just incidental to the consulting engagement, the firm may conduct the engagement under CS Section 100 and not under AR-C Section 70.
The Standard that Applies Depends on the Type of Engagement
The critical issue here is what the main purpose of the engagement is and not whether the financial statements are prepared or not. In cases where the client mainly wants to get strategic financial advice from the firm, and financial statement preparation is just one of the services provided, then the engagement falls within CS Section 100. In cases where the purpose of the engagement is the preparation of financial statements, the AR-C Section 70 is the proper standard.
Applying AR-C Section 70 Remains an Option
Even though SSARS No. 27 brings more flexibility into account, there is nothing that would stop firms from using AR-C Section 70 in situations when it seems reasonable to do so. Certain CPA firms may still prefer preparing financial statements in accordance with the preparation engagement guidelines. This approach better aligns with their existing internal control procedures or risk management practices.
Firms May Continue Using a “No Assurance Is Provided” Statement
Although the financial statements under CS Section 100 are not required to comply with the presentation requirements of AR-C Section 70, some practitioners include a statement such as “No assurance is given with respect to the financial statements.” Although not required under CS Section 100, many organizations see including such a statement as good risk management, clarifying that the engagement involves no attest services.
What is CS Section 100?
CS Section 100, Consulting Services, is a well-established AICPA guideline applicable to the provision of consulting services by CPAs. Despite the fact that no new standard was issued by SSARS No. 27, this statement provided clarity on when CAAS firms could apply the standard of CS Section 100 rather than that of AR-C Section 70. This clarification is particularly relevant in situations where the financial statements are only incidentally prepared alongside other advisory services. This approach helps professionals meet ethical responsibilities and use appropriate standards for their engagements. Whether or not the particular engagement would be covered by the CS Section 100, professionals are required to follow four basic standards of conducting consulting services:
| Standard | What It Requires |
|---|---|
| Professional competence | Undertake only engagements the practitioner can reasonably expect to complete with professional competence |
| Due professional care | Exercise due professional care in performance and planning |
| Planning and supervision | Adequately plan and supervise the performance of the engagement |
| Adequate pertinent information. | Gather adequate relevant information to establish a sound foundation for conclusions or recommendations. |
AR-C Section 70 vs. CS Section 100: Side-by-Side Comparison
While both AR-C Section 70 and CS Section 100 can apply to services provided by CAAS firms, they are designed for different types of engagements. The basic difference arises from the purpose of the engagement itself. Gather adequate pertinent information to form a solid foundation for conclusions or suggestions. In case the engagement is aimed at preparing financial statements. The applicable standard, in the case of AR-C Section 70, is that if the preparation of financial statements is just incidental to the larger consulting or advisory engagement, then CS Section 100 becomes applicable. It is important to understand the difference between the two in order to know which of the standards applies to the engagement. The table below compares two standards on the points that matter most to CAAS firms.
| Factor | AR-C Section 70 (Preparation Engagement) | CS Section 100 (Consulting Engagement) |
|---|---|---|
| When it applies | Financial statement preparation is the primary objective | Financial statement is incidental to a broader advisory engagement |
| Governing framework | SSARS No. 21 | AICPA consulting standards |
| Independence required | No | No |
| Subject to firm’s SQMS | Yes | No |
| Included in peer review | Yes | No |
| Signed engagement letter | Required | Not required, but generally recommended |
| “No assurance” legend | Required on each page of the financial statement | Optional, used by some firms as a safeguard |
| Effective date | Current standard (no change) | Election available now; SSARS No. 27 formalizes it for periods ending on or after Dec. 15, 2026 |
How Does this Update Benefit CAAS Providers
The clarification introduced by SSARS No. 27 offers several practical advantages for CPA firms providing Client Accounting and Advisory Services (CAAS). This advisory option helps firms meet CS 100 compliance, aligning their compliance needs with their services, making them more efficient and flexible. This will solve the existing tension that has existed in the past when rendering advisory-driven services against the financial reporting models and hence allow them to arrange their services accordingly. This will also facilitate a smoother transition of bookkeeping, controllership, and advisory services under one service model.
- Reduced Administrative Burden
- More Streamlined Workflows
- Lower Quality Management and Peer Review Overhead
- Better Alignment with Client Expectations
- Greater Support for Scaling a CAAS Practice
Frequently Asked Questions
As CAAS firms continue adapting to the clarified framework introduced by SSARS No. 27, a range of practical implementation questions has emerged around how CS Section 100 engagements operate in day-to-day practice. These questions typically focus on scope boundaries, financial statement usage, documentation expectations, and client communication. The following FAQs address some of the most common areas where CAAS providers seek clarity when structuring advisory-led engagements under CS Section 100.
Yes, financial statements produced within a CS Section 100 engagement may be shared with third parties, provided this is consistent with the engagement’s scope and the client’s authorization. Since CS 100 engagements are advisory in nature, financial statements are generally considered a byproduct of the consulting services rather than a formally issued reporting product. However, it is imperative for organizations to be careful regarding the possible interpretations of such statements from the outside world. It would be extremely important if the information was used by any third parties for them to be clear about the purpose of their engagement so that the financial statements cannot be misinterpreted as being audited, reviewed, or any kind of attested financial statements.
Financial statements generated under CS Section 100 do not require a formal “clearance” process similar to SSARS-based preparation or assurance engagements. Because CS 100 engagements fall under consulting services, the deliverables are not subject to the same issuance protocols required for financial statement reporting engagements.
Nonetheless, the companies are supposed to show prudence in the issuance of their financial information. They should go through the processes of ensuring that the information is accurate, consistent with the actual data, and within the advisory scope as specified in the engagement letter. Although the clearance process does not necessarily have to be formalized, there should still be a proper review process.
The key factor is the primary objective of the engagement. If the main purpose is to prepare financial statements in a standardized reporting format, AR-C Section 70 applies. When the financial statements are prepared as a by-product of other advisory activities such as budgeting, forecasting, controllership, and CFO advisory, then the audit engagement can fall within the scope of CS Section 100. This must be decided when planning the engagement and properly recorded in the engagement letter. The firm must not try to reclassify the engagement once it has started.
Yes, engagement letters are still essential. Although CS Section 100 engagements are exempt from preparation requirements under SSARS, the firms are supposed to provide a clear understanding of the scope, objectives, responsibilities, and limitations of the services rendered.
This is due to the fact that an appropriately written letter will serve as a tool to differentiate advisory services from financial reporting, thus avoiding any misunderstanding on the client’s or third-party entity’s part.
Key Takeaways
As mentioned in the above blog, for CAAS providers, the practical effect of electing CS Section 100 is a lighter compliance footprint: engagements fall outside the firm’s system of quality management and are excluded from peer review populations, and engagement letters can be simplified, though most firms will still use them as a matter of sound practice. None of this lowers the standard of care expected of practitioners. Organizations are advised to continue to practice due professional care and maintain their documentation of why the conclusion that the financial statement was incidental was reached, and update the same as the deadline of mandatory compliance nears. Early compliance is acceptable, and firms that take the opportunity now to revise their engagement letters, workflows, and risk management processes will be in the best position once the requirement is mandatory.
