Some accountants are noted to view the preparation of financial statements as a distinct service Credit: NicoElNino/Shutterstock.

American Institute of Certified Public Accountants (AICPA) has proposed an amendment to its standard concerning the preparation of financial statements.  

This change aims to clarify that Certified Public Accountants (CPAs) are not required to apply AR-C Section 70, Preparation of Financial Statements, when financial statements are produced as a byproduct of a client advisory services (CAS) engagement, reported CPA Practice Advisor.  

CAS, encompassing controllership and Chief Financial Officer (CFO) services, has seen growth in recent years.  

In these engagements, accountants often take on management-level responsibilities, sometimes acting as the client’s outsourced CFO.  

The AICPA notes that financial statements generated in this context are incidental to the broader service provided. 

Some accountants treat these services under the consulting services standard, CS Section 100, Consulting Services: Definitions and Standards. 

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Meanwhile, others view the preparation of financial statements as a distinct service, adhering to AR-C section 70.  

The AICPA acknowledges that both approaches are currently acceptable. 

Accounting and Review Services Committee (ARSC), the body responsible for AR-C Section 70, has concluded that there is no distinct loss to users of the financial statements if the entire engagement is conducted following CS Section 100.  

The proposed amendment would allow accountants to choose not to apply AR-C Section 70, instead of performing the engagement in line with CS Section 100. 

If the amendment, titled “Applicability of AR-C Section 70 to Financial Statements Prepared as Part of a Consulting Services Engagement,” is approved and issued as final, it will update AR-C Section 70 of SSARS No. 21, Clarification and Recodification.