1.3 Agreed upon procedures

Agreed upon procedures (AUP) engagements are a type of assurance engagement where an independent professional accountant or auditor performs specific procedures on identified subject matter and reports the findings. AUP engagements are typically conducted when a client or a third party requires an objective assessment or verification of specific information without the need for a full audit or opinion.

Here are the key aspects of agreed upon procedures engagements:

Engagement Letter: The engagement letter for AUP engagements will outline the specific procedures to be performed, the objective of the engagement, the responsible parties, and the agreed-upon criteria against which the findings will be evaluated. It will also cover the timing, fee arrangements, and any confidentiality or reporting requirements.

Procedures: The accountant or auditor will perform procedures that are agreed upon between the parties involved. These procedures can be tailored to the specific needs and requirements of the engagement. The procedures should be designed to obtain sufficient and appropriate evidence to support the findings.

Subject Matter: The subject matter of AUP engagements can vary widely and depends on the specific requirements of the engagement. It can include financial data, internal controls, compliance with laws and regulations, operational processes, or any other specified information.

Reporting: The AUP report will present the findings of the procedures performed. Unlike traditional assurance engagements, the report does not include an overall opinion or conclusion. Instead, it provides the factual results of the agreed-upon procedures. The report may also include any additional information or explanations necessary to provide context for the findings.

Distribution and Use: The AUP report is typically intended for the specific parties involved in the engagement. It may be shared with the client, third parties, or other stakeholders as agreed upon in the engagement letter. The report’s use is typically restricted to the purpose specified in the engagement.

Limitations: It’s important to note that AUP engagements have certain limitations. The procedures performed are only limited to those agreed upon, and the report does not provide an opinion on the subject matter as a whole. The report focuses on the factual findings resulting from the procedures and does not express an overall conclusion or assurance.

AUP engagements provide flexibility in tailoring procedures to address specific concerns or areas of interest, allowing stakeholders to obtain independent verification on specific information without the need for a comprehensive audit. However, it’s essential to carefully define the scope, procedures, and reporting requirements in the engagement letter to ensure clarity and alignment with the stakeholders’ expectations.