What it is
A preparation engagement produces financial statements with no assurance and no report. It is the lightest SSARS service, so the risk is not heavy procedures but missing terms: no engagement letter, no legend, or a client that later hands the statements to a bank as if they were compiled.
This checklist confirms the terms and the legend, the nonattest service evaluation under ET 1.295 and the file. Where the client needs any assurance or a report, move to a compilation or review.
When to use it
- Before starting any engagement to prepare financial statements without a report.
- When clients ask for statements for management use only.
- To check files before a peer review.
What’s inside
- Acceptance, terms and engagement letter
- Performance: framework, departures and omitted disclosures
- Legend and delivery
- File and review by a second person
Standard cited
This template follows AR-C 70 / AR-C 60. It is written in our own words, except for phrases the standard requires the document to contain, with [bracketed placeholders] for client details, amounts in USD and dates as MM/DD/YYYY. Check it against the current standard and your firm’s methodology before use.
Questions
Does a preparation need an engagement letter?
Yes. AR-C 70 requires the agreement to be in writing and signed by both the accountant and management. It covers the objective, management’s and the accountant’s responsibilities, limitations, the framework, whether the statements contain known departures or omit substantially all disclosures, and either a no-assurance legend on each page or a disclaimer report.
Do I need to be independent?
No. Independence is not required for a preparation or a compilation, though a compilation report states the lack of independence. Nonattest service rules still apply when you also serve the client in an attest capacity.
What if a lender wants the statements?
Consider whether a compilation or review is more appropriate for that lender. A preparation engagement gives no assurance, so a third party that relies on the statements has none from the accountant. Record the intended use in the engagement file.
Related templates
- Preparation Engagement Letter (AR-C 70)
- Compilation Engagement Checklist (AR-C 80)
- Compilation Report and Management Letter Shells (AR-C 80)
Last updated 11/05/2026. All free templates.