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SSARS 27: When AR-C 70 Applies to Client Advisory Services and When CS 100 Can Be Elected

SSARS 27 clarifies that AR-C 70 is not required for financial statements prepared as part of a CS 100 consulting engagement. The primary-objective test, effective date December 15, 2026, quality management and peer review effects, and documentation.

CORAA TeamUpdated November 5, 20268 min read

Statement on Standards for Accounting and Review Services (SSARS) No. 27, Applicability of AR-C Section 70 to Financial Statements Prepared as Part of a Consulting Services Engagement, was issued by the AICPA's Accounting and Review Services Committee in April 2025. It amends AR-C section 70, Preparation of Financial Statements, to say that AR-C 70 is not required for financial statements prepared as part of a consulting services engagement performed under CS section 100, Consulting Services: Definitions and Standards. A firm may still apply AR-C 70 in whole or in part.

The change matters to firms running outsourced accounting, controllership or CFO-style services, where monthly financial statements come out of the work but are not the reason the client hired the firm. For how a preparation engagement works when AR-C 70 does apply, see preparation engagements under AR-C 70.

When is SSARS 27 effective?

SSARS 27 is effective for the preparation of financial statements for periods ending on or after December 15, 2026. Early implementation was permitted from publication in April 2025. For a calendar-year client, the December 31, 2026 financial statements are the first period that falls under the new text without early adoption, and a firm that elects it for monthly statements can begin with the period ended December 31, 2026.

What exactly did SSARS 27 change?

Before the amendment, a literal reading of AR-C 70 could sweep in any financial statements a firm prepared for a client, including dashboards, budgets and management packages produced as part of broader advisory work. The firm then had no clear route to treat that work as consulting. SSARS 27 closes that gap. The test turns on the primary objective of the engagement.

  • If preparing the financial statements is the primary objective of the engagement, the work falls under the SSARS: AR-C 70 for preparation, or AR-C 80 or AR-C 90 for a compilation or review.
  • If preparing financial statements is not the primary objective, for example the firm is engaged to process transactions and perform the controllership functions an accounting department would, the firm can elect to perform the whole engagement, financial statements included, under CS 100.

The election is the firm's and client's to make, engagement by engagement or for a whole client base, depending on how standardized the statement of work is.

What does CS 100 require instead?

CS 100 applies the general professional standards of professional competence, due professional care, planning and supervision, and sufficient relevant data to consulting services. Work done by a CPA also remains subject to the AICPA Code of Professional Conduct, including due professional care. CS 100 does not prescribe a report or a legend.

What changes for quality management and peer review?

Per the CPA.com FAQ on the clarification:

  • Work performed under the SSARS falls under the firm's system of quality management and can be included in the population of engagements selected for peer review.
  • Work performed under the consulting standards does not fall under the quality management standards or peer review.

That is a real shift in the firm's risk profile. A consulting engagement that sits outside peer review still carries professional liability and Code obligations, so the quality controls the firm drops for these engagements are a business decision, not a requirement. See SQMS 1 for small firms and the AICPA peer review guide.

What about the financial statements themselves?

CS 100 does not forbid or require specific content in a work product. The CPA.com FAQ draws these points:

  • Third parties. CS 100 does not prohibit giving the statements to third parties.
  • Legends. A "no assurance is provided" legend or a statement that substantially all disclosures are omitted is not required under CS 100, but the firm may include one if it reduces the risk that a user is misled by the firm's association with the statements.
  • Framework. The AICPA Code requires a member to indicate when statements are not in accordance with GAAP. Statements should therefore be clear about the framework they present. Tax basis, cash basis, modified cash and FRF for SMEs statements say so; statements not labeled as one of those are taken to be GAAP, and any departure from GAAP must be clearly noted.
  • Independence. Neither CS 100 nor AR-C 70 requires a determination of independence for the service, and no reference to independence is required in either case.
  • Misleading statements. The accountant has a professional obligation not to be associated with statements that he or she believes are misleading.

What should the engagement letter and file show?

The CPA.com FAQ says a firm that converts an existing engagement from AR-C 70 to CS 100 must amend its engagement letter in writing, either with a new letter or an addendum. One letter can cover both a CS 100 engagement and a separate SSARS engagement as long as the required elements for each are included.

The CalCPA article on SSARS 27 recommends the file show four things: why the engagement qualifies as consulting under CS 100, why preparing statements is not the primary objective, which other services or deliverables support that conclusion, and that the firm and client both understand the services fall under the consulting standards. It also cautions that SSARS 27 is not a blanket exception and that calling an engagement "CAS" or "consulting" does not move it out of the SSARS if the facts say otherwise. Determination is by substance, from scope, deliverables and client expectations.

Illustration (illustrative)

A firm runs monthly bookkeeping, payables processing, a cash forecast and a KPI dashboard for a distributor, and sends monthly financial statements to the owners. The monthly statements are a by-product of the broader work, so the firm can elect CS 100 for the monthly work, amend the engagement letter, and drop the AR-C 70 legend if it judges that readers will not be misled.

The distributor's bank requires a compilation report on the year-end statements. That deliverable has the statements as its primary objective, so the year-end work is an AR-C 80 compilation under its own letter or its own section of a combined letter, with quality management and peer review applying to it. If the bank had required quarterly statements with a report, the quarterly work would also be an SSARS engagement.

Where do firms get stuck?

These are practice observations, not findings from a published source:

  • Electing CS 100 across the whole client base without checking clients where the monthly statements are what the client actually pays for.
  • Leaving the old AR-C 70 engagement letter in place after the switch.
  • Dropping legends and then sending the statements to a lender who reads them as CPA-prepared and assured.
  • Treating the exception as a way to stay outside peer review for work that is really recurring statement preparation.
  • Not tracking when a client's reliance changes, such as a new lender covenant requiring statements.

Frequently asked questions

Does SSARS 27 mean I never have to follow AR-C 70 for CAS clients?

No. It applies only where preparing financial statements is not the primary objective and the engagement is performed under CS 100. Where the statements are the primary objective, the SSARS apply.

When does SSARS 27 take effect?

For the preparation of financial statements for periods ending on or after December 15, 2026. Early implementation is permitted.

Does the firm need to be independent?

No. Independence is not required for a preparation engagement under AR-C 70 or for CS 100 consulting work.

Does CS 100 work go through peer review?

Per the CPA.com FAQ, work performed under the consulting standards does not fall under the firm's quality management system or peer review. Work under the SSARS does and can be selected for peer review.

Can I still use the no-assurance legend?

Yes, voluntarily. CS 100 neither requires nor prohibits it, and a firm that judges the legend reduces the risk of users being misled can include it.

Sources

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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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