Proposed statement on standards for Accounting and Review Services (SSARS), Applicability of AR-C section 70 to financial statements prepared as part of a consulting services engagement

Accounting and Review Services Committee (ARSC):

We appreciate the opportunity to comment on the proposed statement referenced above.

By way of background, Baker Tilly US, LLP and Baker Tilly Advisory Group, LP and its subsidiary entities provide professional services through an alternative practice structure in accordance with the AICPA Code of Professional Conduct and applicable laws, regulations and professional standards. Baker Tilly US, LLP is a licensed independent CPA firm that provides attest services. Baker Tilly Advisory Group, LP and its subsidiary entities provide tax and business advisory services. Baker Tilly Advisory Group, LP and its subsidiary entities are not licensed CPA firms.

We support the proposed revisions outlined in proposed statement, “Applicability of AR-C Section 70 to Financial Statements Prepared as Part of a Consulting Services Engagement.” In addition, we would like to commend the ARSC for taking on this important project as we believe the proposed statement will benefit both practitioners and the public by providing clarity and consistency regarding the applicability and application of AR-C section 70 within the context of broader consulting services and client advisory services (CAS) engagements. These amendments will better align professional standards with current practice, particularly the increasing prevalence of CAS within the public accounting industry and the increase in firms providing services through an alternative practice structure, such as ours.

Our comments will be in the form of responses to the specific questions included in the proposed statement.

Specific request for comment 1

Do respondents believe that it is in the public interest to explicitly exclude financial statements prepared as part of a consulting services engagement performed in accordance with CS section 100 from those engagements for which AR-C section 70 is required to be applied? Please provide your reasons for your position.

We support the ARSC’s proposed statement which would explicitly exclude financial statements prepared as part of a broader consulting services engagement performed under CS section 100 from AR-C section 70. The increase in consulting services and CAS within public accounting firms has blurred the lines between consulting services and financial statement preparation, making it difficult to determine when the preparation of financial statements falls within AR-C section 70. Often, producing or preparing financial statements is a part of a broader consulting services engagement, such as bookkeeping, controller or outsourced CFO services. Although practitioners may not be explicitly engaged to produce or prepare financial statements, the expectation of financial statements as a client deliverable or as part of a client deliverable may be implied or evolve into an expectation of the engagement over time. As a result, we believe that allowing the application of CS section 100 to engagements, where the preparation of financial statements is part of a broader consulting services engagement, will provide much needed clarity regarding the applicability of AR-C section 70 and increase the consistency of its application without adversely affecting the public interest due to the safeguards provided by CS section 100.