A&A Focus recap: Rev rec, AICPA standard setting update, and stablecoins

The AICPA A&A Focus Series webcast on March 5 offered a comprehensive discussion on accounting, auditing, and assurance developments, highlighted by the latest in a series on revenue recognition, an overview of recent AICPA standard-setting activities, and an overview of stablecoins and the AICPA’s newly available reporting criteria. Hosted by Bob Durak, CPA, CGMA, director of A&A Technical Services at the AICPA, and Andrew Merryman, CPA, senior manager–A&A Technical Services, the session featured discussions with special guests Mike Westervelt, Angela Newell, and Jay Schulman, as well as a prepared update from Sara Lord.

Update from the Auditing Standards Board

Sara Lord, CPA, chief auditor at RSM and chair of the AICPA Auditing Standards Board (ASB), delivered a pre-recorded update on key developments from the ASB’s Feb. 13 meeting. She provided insights into several major initiatives, including proposed updates to the current standard on confirmations, amendments to attestation standards, and the ASB’s ongoing strategic planning efforts.

One of the primary topics was the ASB’s decision to issue an exposure draft on updates to the confirmations standard. The proposed amendments would affect AU-C Section 330, Performing Procedures in Response to Assessed Risks and Evaluating the Audit Evidence Obtained; AU-C Section 500, Audit Evidence; and AU-C Section 505, External Confirmations. A key change involves the introduction of a presumptively mandatory requirement for cash confirmations, except in certain cases. The ASB is actively seeking feedback on whether this requirement and its outlined exceptions are appropriate and asks stakeholders to provide comments on all aspects of the exposure draft by June 30.

Lord also discussed an exposure draft proposing narrow-scope amendments to the AICPA’s attestation standards, particularly in cases where a scope limitation exists in sustainability reporting engagements. Under the current standard, practitioners must withdraw when faced with a scope limitation. The proposed revision would allow for qualified opinions or disclaimer conclusions when withdrawal is not an option due to regulatory constraints. The ASB is requesting comments on this exposure draft by May 30.

Additionally, the ASB has finalized its proposed 2026–2030 strategic plan, highlighting the Board’s approach to serving the public interest. More information on the plan is available and the ASB is seeking public comments through June 13.

Information on how to electronically provide comments is included in the text of each exposure draft, or comments can be submitted via email to commentletters@aicpa-cima.com.

Update on compilation, preparation and review standards

Mike Westervelt, CPA, principal at CLA and chair of the AICPA’s Accounting and Review Services Committee (ARSC), kicked off the live discussions. Westervelt provided an update on a key proposed change to the Statements on Standards for Accounting and Review Services (SSARS) that could significantly impact firms engaged in client advisory services (CAS).

Westervelt explained that ARSC has been evaluating whether CPAs performing broader advisory and consulting engagements should be scoped out of preparation service standards, namely AR-C Section 70, Preparation of Financial Statements. This initiative responds to increasing concerns from firms that the current preparation standards do not align well with the advisory role many CPAs play today, for example when acting as outsourced CFOs or controllers.

Currently, firms performing preparation engagements must comply with AR-C Section 70, which includes disclosure requirements such as the “no assurance” statement. However, many CAS professionals argue that their services do not constitute a preparation engagement in the traditional sense.

Westervelt noted that firms offering outsourced CFO services, financial consulting, and broader management advisory engagements often deliver financial statements as a byproduct of their work rather than as a primary service. Under the proposed revision, such firms would not be subject to AR-C Section 70 and instead would be subject to the AICPA Statement on Standards for Consulting Services, which focuses more on advisory roles rather than financial statement preparation.

Westervelt highlighted that ARSC received approximately 80 comment letters in response to the exposure draft, with feedback coming from firms, state societies, technical issue committees, and individuals. The overwhelming response was 95% in favor of the change, demonstrating strong support for the clearer delineation between preparation and consulting engagements. Although the response was positive, some comments provided valuable feedback for fine-tuning the language of the standard.

Given the strong support, ARSC is moving forward with finalizing the standard, incorporating feedback from the comment letters. The revision’s final wording is expected to be approved by the end of this month.

Regarding implementation, the new standard will take effect for periods ending on or after Dec. 15, 2026, providing ample time for firms to adjust their policies and undergo necessary training. However, early adoption will be permitted upon issuance, allowing firms that are already operating under CAS models to immediately align with the revised standard.

As firms expand their advisory offerings, this revision provides a more accurate framework to distinguish preparation services from consulting engagements.

Revenue recognition: Step 4: Allocating the transaction price

In the broadcast’s second segment, Angela Newell, CPA, deputy managing director at BDO, continued her ongoing discussion of the five-step revenue recognition model under FASB ASC Topic 606, Revenue From Contracts With Customers, focusing on step 4 — allocating the transaction price.

Newell highlighted common challenges companies face when allocating revenue across multiple performance obligations in a contract, providing practical insights into how organizations can correctly apply the standard.

Newell began by explaining that step 4 of the Topic 606 model requires entities to allocate the total transaction price to the distinct performance obligations identified in step 2, using stand-alone selling prices as the basis.

While this may appear to be a simple mathematical exercise, she emphasized that many companies mistakenly assume that the prices outlined in the contract represent true stand-alone selling prices — which is not necessarily the case under Topic 606. While contract terms may include assigned prices for different performance obligations, Topic 606 requires entities to validate these prices independently. Entities are required to compare these prices to observable market prices or use an estimation method, such as cost-plus-margin, to ensure proper allocation. This step ensures that revenue is accurately assigned based on economic reality rather than contract structuring.

Another difficulty involves allocating variable consideration. Contracts often include performance-based incentives, milestone payments, or discounts, which must be allocated properly. Businesses must determine whether a variable amount applies to a specific performance obligation or should be spread across multiple obligations. For example, if a contract includes a performance bonus tied to completing a performance obligation ahead of schedule, the entity is required to assess whether that bonus should apply solely to that individual performance obligation or be distributed across all performance obligations in the contract. This distinction is crucial, as it directly impacts when and how revenue is recognized under Topic 606.

Newell concluded by reinforcing that proper revenue allocation is essential to compliance with Topic 606. Although many companies may ultimately allocate revenue in a way that aligns with invoice prices, she stressed that Topic 606 does not allow firms to assume this outcome — it must be proven.

Newell will return for the May 7 edition of A&A Focus to discuss the final step in the revenue recognition model, addressing recognizing revenue when each performance obligation is satisfied.

Stablecoins and the AICPA reporting criteria

Jay Schulman, CPA, principal at RSM and leader of its digital assets practice, provided an in-depth discussion on stablecoins, their role in financial transactions, and the auditing considerations surrounding them. Schulman emphasized that, unlike bitcoin, which lacks tangible backing, stablecoins are pegged to an underlying reserve asset, typically a fiat currency like the U.S. dollar. This structure aims to reduce volatility and provide a more stable means of conducting digital transactions.

Schulman noted that one of the key advantages of stablecoins is their ability to facilitate transactions 24/7 across global markets, bypassing the traditional banking system’s time constraints. Businesses and financial institutions are increasingly integrating stablecoins into their operations for faster and more efficient cross-border payments. Schulman noted that while the potential benefits are substantial, proper auditing and reporting standards must be established to ensure trust and transparency.

A critical aspect of stablecoin auditing is the verification of reserves. Because stablecoins are only as reliable as the assets backing them, auditors are often tasked with confirming that the number of tokens in circulation matches the reserves held by the issuer. Schulman highlighted the work of the AICPA Digital Assets Working Group, which has developed the 2025 Criteria for Stablecoin Reporting: Specific to Asset-Backed Fiat-Pegged Tokens. These criteria are designed to help auditors establish best practices for evaluating stablecoin reserves and issuer controls.

Additionally, the AICPA is working on control standards to help ensure that stablecoin issuers maintain appropriate safeguards against risks such as fraud, financial misstatements, and regulatory noncompliance. Schulman mentioned that upcoming regulatory developments may further define the responsibilities of auditors and accountants in the stablecoin space.

Schulman concluded by stressing that as stablecoins gain wider use, auditors are advised to stay informed about evolving regulatory frameworks and reporting criteria. The profession will play a vital role in ensuring that stablecoin issuers uphold transparency and maintain financial integrity in this emerging space.

Open forum

In the open forum segment, our guests answered viewer questions. First, Westervelt responded to a question on how the proposed changes to ARSC’s preparation standards would affect tax preparers and bookkeepers who summarize financial statements for tax return purposes. Westervelt responded that the change is intended to provide greater clarity on whether certain engagements fall under preparation or consulting standards. CPAs working in CAS will need to carefully assess their engagements to determine whether they should follow consulting standards instead.

Next, Westervelt addressed a question on whether CAS engagements are clearly distinguished from general bookkeeping under the revised standard. Westervelt emphasized that professional judgment is essential in determining whether an engagement qualifies as preparation or consulting, and firms should document their scope of work and engagement terms to ensure compliance.

Newell addressed a question about contracts with multiple performance obligations and a single total price. She confirmed that revenue must be allocated using stand-alone selling prices and that performance obligations recognized in different periods require proper allocation. She reiterated that CPAs cannot assume contract prices align with stand-alone selling prices and must perform independent assessments based on Topic 606 guidance.

In response to a viewer question, Schulman clarified that digital payment services like Venmo and Zelle are not considered stablecoins because they do not operate on a blockchain. However, PayPal’s recent launch of its own stablecoin signals a trend toward greater adoption of blockchain-based digital assets in mainstream financial services.

Looking ahead

Wrapping up the broadcast, Durak encouraged members to stay engaged with exposure drafts and standards updates. The broadcast concluded with a preview of next month’s A&A Focus, live on April 2, including planned discussions with Mike Cheng, CPA, partner at Frazier & Deeter and member of the FASB Private Company Council, and Debbie Smith, CPA, head of Grant Thornton’s employee benefit plans practice and chair of the AICPA’s Employee Benefit Plan Audit Quality Center.

AICPA members are encouraged to attend these monthly events and review the accompanying newsletters for more in-depth coverage of these critical topics. Members can access archives of past sessions at the A&A Focus Series webpage.

— Dave Arman, CPA, MBA, is senior manager–Audit Quality at AICPA & CIMA, together as the Association of International Certified Professional Accountants. To comment on this article or to suggest an idea for another article, contact Jeff Drew at Jeff.Drew@aicpa-cima.com.