Agreed upon procedures

 

An agreed-upon procedures (AUP) engagement is an engagement in which an auditor, a client or any third party agrees that certain procedures are carried out by the auditor and details are reported to the client or the third party. 

Factual findings are reported to the parties for drawing their own conclusions and the report is restricted to the parties who have agreed to the procedures, i.e. it is not circulated to other potential users since others, unaware of reasons for the procedures, may misinterpret the results.

Auditors do not express their own opinion in respect of factual findings or financial statement, unlike with audit or review engagements, when acting as finders of fact. If an audit or review is not required, the AUP will be an optimum alternative to ensure best results upon review & analysis of the most risky spheres of business. Agile approach in planning this type of work secures full value performance with the optimum-scale budgeted cost.

AUP engagements may target specific financial data (such as payables, receivables or certain transactions), non-financial information (such as a review of internal controls or compliance with some agreement), a specific financial statement (such as the income statement or balance sheet) or even a complete set of financial statements.

When & Why Required

• Limited budget for external assurance services

• Limited number of skilled and reliable employees who can carry out necessary procedures

• Clear understanding of an entity’s management as to the risky areas in the business

• Understanding of the type of procedures to be carried out

• In combination with other assurance engagements, focusing on certain procedures being untypical for the assurance engagements given their sampling nature

• Flexibility in choosing the appropriate period of time during a year (not just at the year end)