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Guides/Advisory Services

CS Section 100: The Consulting Standards Behind CPA Advisory Work

What AICPA CS Section 100 (SSCS No. 1) requires of CPAs who provide consulting and advisory services: general standards, how consulting differs from attest and AR-C 70 preparation, SSARS 27, and the engagement letter and file elements.

CORAA TeamUpdated November 5, 20266 min read

Advisory services sit in a standards gap in many firms' minds. There is no opinion and no report in the audit sense, so teams treat the work as informal. The AICPA's Statement on Standards for Consulting Services, codified as CS Section 100, applies anyway, along with the Code of Professional Conduct. This article explains what the standard covers, how it interacts with financial statement preparation and what a firm's advisory file should contain.

What the standard requires

The Journal of Accountancy describes CS Section 100 as including the general professional standards of professional competence and due professional care, along with planning and supervision and sufficient relevant data, applied to consulting services. A firm accepting an advisory engagement must be able to complete it competently, perform it with due care, plan and supervise it and have enough relevant data to support what it tells the client.

The standard also sets out standards that are particular to consulting. They address the client's interest, an understanding with the client about the engagement, and communication of significant reservations about the scope or benefits of the engagement. Read the wording of each in the standard itself. The engagement letter should reflect all three, and the understanding should be updated if the engagement changes significantly.

Consulting is nonattest. The practitioner gives advice and does not express an opinion or provide assurance. The Code of Professional Conduct still applies, including its rules on independence for attest clients, objectivity and confidentiality. See independence and nonattest services for small firms.

Consulting and financial statements: AR-C 70 and SSARS 27

Many advisory engagements involve producing financial statements, such as monthly management reports that the CPA assembles. Before SSARS 27, financial statements prepared as part of consulting raised the question of whether AR-C 70 on preparation applied. SSARS 27, issued April 7, 2025, applies to preparation for periods ending on or after December 15, 2026, with early implementation permitted. Under it, a practitioner is not required to apply AR-C 70 when financial statements are prepared as part of a consulting engagement performed under CS 100 and preparing them is not the engagement's primary objective. The firm and client must agree the work is performed under the consulting standards, and a consulting label alone does not qualify an engagement. Map the exception to each engagement. If the main purpose is producing financial statements, AR-C 70 applies whatever the engagement is called. See SSARS in force for 2026 and AR-C 70 preparation engagements.

In explaining why the exception is acceptable, the AICPA's Accounting and Review Services Committee said the safeguards in CS 100 would minimize the risk that a user would be misled, as the Journal of Accountancy reported. For a recurring advisory client, document:

  • The primary objective of the engagement.
  • Why the financial statements are a by-product.
  • How the statements are labeled and who receives them.
  • A statement that the statements are for management use and are not accompanied by assurance.

Where a lender or investor asks for the statements, revisit the primary objective, because third-party use is the situation that most often pushes work back toward AR-C 70 or a compilation. See compilation under AR-C 80.

Engagement letter checklist

  1. Objectives and deliverables. What the firm will do and what the client receives.
  2. Responsibilities. What management does, including decisions. The firm advises, and management decides. Management responsibility is a threat to independence for attest clients.
  3. Scope limits. What the firm will not do, such as audit, legal advice or investment advice.
  4. Data and reliance. What information the client supplies and that the firm does not audit it.
  5. Fees and pricing basis. See CPA firm pricing models.
  6. Confidentiality and use of third-party tools. See confidentiality and AI tools with client data.
  7. Term and termination. Start, end, notice and return of records.
  8. Reservations clause. How the firm will communicate concerns about the scope or likely benefit of the work.

The advisory file

A file does not need audit-level documentation, and it does need to show competence, care, planning, supervision and sufficient data. For a typical engagement:

  • Engagement letter and acceptance memo, including independence and conflict checks.
  • Work plan with who does what.
  • Data requests and what was received.
  • Analyses with references to sources.
  • Review evidence, signed and dated.
  • Deliverables as issued.
  • Communications recording significant reservations or changes in scope.

Compare this to the documentation discipline in how to document audit procedures. The principle is the same, even if the volume is lower.

Common failure points

  • No written scope, so the client expects more than the firm planned.
  • Advice given on data the firm did not review.
  • Recurring statement work that drifts from advisory into preparation without an update to the engagement letter.
  • Making management decisions for an attest client.
  • No conflict check when advising both sides of a relationship.

FAQ

Does CS 100 apply to tax advice?

Tax advice has its own rules, including Circular 230 for practice before the IRS. CS 100 covers consulting services broadly.

Does CS 100 require a report?

The standard does not call for an opinion or assurance report. It does require an understanding with the client about the engagement. The standard does not require it in writing, so firms should put it in the engagement letter anyway.

What does SSARS 27 change?

Issued April 7, 2025, it states that a practitioner is not required to apply AR-C 70 when financial statements are prepared as part of a consulting engagement and are not its primary objective, for periods ending on or after December 15, 2026.

CORAA prepares ready-to-review audit files for US CPA firms; see /us.

Sources

Part of CORAA University · Tax and compliance for CPA firms: related guides, calculators and templates.

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AU-C references are to AICPA Professional Standards, paraphrased here; read the standard itself before relying on a requirement. This page is guidance, not professional advice. Report an error

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