The Accounting and Review Services Committee (ARSC) has proposed critical clarifications to AR-C section 70, addressing its applicability in consulting engagements. These updates aim to simplify compliance, reduce confusion, and empower accountants to provide exceptional client advisory services (CAS) without unnecessary complications. Let’s break down what’s changing, why it matters, and what it means for your practice.
What’s New with AR-C Section 70? The ARSC proposes to clarify when AR-C section 70 applies to financial statements prepared as part of consulting engagements. Previously, accountants often grappled with whether to treat these financial statements as a separate service under AR-C section 70 or as a by-product of a broader CAS engagement under CS section 100. This proposal recognizes the growing role of CAS, such as outsourced CFO or controllership services, and confirms that accountants are not required to apply AR-C section 70 if financial statement preparation is incidental to these engagements.
Why Does This Matter? For accountants working in CAS, the clarification simplifies decision-making and compliance:
Consistency in Practice: The new guidance helps eliminate inconsistencies by providing clear options for how to handle financial statement preparation during CAS engagements.
Reduced Administrative Burden: Choosing CS section 100 for the entire engagement streamlines processes and removes the additional requirements associated with AR-C section 70, such as quality management standards and peer review.
Flexibility for CAS Growth: With the continued expansion of CAS offerings, this clarification allows accountants to focus on delivering value without unnecessary complexity.
What’s the Big Takeaway? The ARSC’s clarification emphasizes flexibility. Accountants can perform the entire engagement under CS section 100 when financial statement preparation is incidental to CAS. This eliminates unnecessary compliance hurdles while maintaining adherence to the AICPA Code of Professional Conduct. Ultimately, the goal is to empower accountants to focus on client needs without compromising ethical and professional standards.
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