First-Time Penalty Abatement Is Being Replaced
August 25, 2026
The state-citizen-only tax dodge resurfaces in Kim v. United States, and the court dismisses it
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The issuance of SSARS 27 will not impact many CPAs, however it is a welcome clarification of an area which has been confusing for many since the issuance of SSARS 21.
The major topic here is the application of AR-C section 70, which deals with preparation engagements. The question is whether you are required to follow the guidance of section 70. There are already many exceptions where you will perform a preparation and not have to follow the guidance under section 70.
This update clarifies that AR-C section 70 will never apply when you have been engaged to perform a compilation, review, or an audit. It then goes on to clarify that it will also not apply if you are engaged to perform a consulting engagement for which the preparation of financial statements is not the primary product requested by your client.
Thus, if you have been engaged for a consulting engagement, a business valuation, or a personal financial plan where the primary objective of the engagement is not to prepare financial statements, then section 70 will not apply.
Even if AR-C section 70 does not apply, you are still allowed to indicate on the financial statements that no assurance is provided.
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