Agreed Upon Procedures

Overview

An agreed-upon procedures (AUP) engagement is one in which a licensed CPA firm is engaged by a client to issue a report of findings based on specific procedures performed on a specific subject matter. The agreed upon procedures must be performed in accordance with the American Institute of Certified Public Accountants AT Section 201. The user takes responsibility for the adequacy of the procedures. In this engagement, the accountant does not express an opinion or negative assurance. Instead, the report should be in the form of procedures and findings.

Because the clients require that findings be independently derived, the services of a licensed CPA firm are obtained to perform procedures and report the findings. The specified parties and the licensed CPA firm agree upon the procedures to be performed based on what all parties believe are appropriate. Because the needs of the specified parties may vary widely, the nature, timing, and extent of the AUP may vary as well; consequently, the specified parties assume responsibility for the sufficiency of the procedures since they best understand their own needs. The licensed CPA firm’s report on AUP should be in the form of procedures and findings.

Our Approach

We have performed AUP engagements for a wide variety of subject matters across numerous industries. Because AUP engagements are targeted to meet the risks identified by specified parties, clients pay for the services and limit the scope of the engagement, thus reducing fees. Instead of performing a full blown financial statement audit or review of internal controls across a wide variety of control objectives, we target our testing procedures to those areas of the financial statements or internal controls the specified parties are interested in reviewing.

Our report will not result in an opinion, but will be a detailed account of the exact procedures we performed and the specific results of those procedures. For example, management may be worried about the company’s payroll practices, rates of return on various investments, or accounts receivable and days sales outstanding practices. Upon performing the agreed upon procedures for each of these subject matters, we would generate a detailed report about the Payroll Department procedures and its attention to detail, verify if the resultant rate of return agrees with the percentages in the identified schedules and trace if the accounts receivables procedures in relation to days sales outstanding.

Our partners work directly with the specified parties to ensure the engagement is performed in accordance with the needs and desires of all parties. We provide clearly written results of each agreed-upon procedure of the engagement. Our team of experienced personnel will ensure the engagement runs smoothly with minimal impact on client operations.

Benefits

There are numerous benefits of agreed upon procedures, including:

  • Obtaining loans: A bank may need assurances on receivables and inventory that serve as collateral for a loan. Your auditor can perform agreed upon procedures on those specific financial statement elements. The report generated as a result could be more helpful to the banker and less costly to you.
  • Staying compliant: If you work for a government or nonprofit agency through agreed upon procedures your agency can focus on specific regulatory requirements to determine the agency’s compliance.
  • Winning contracts: If you are a Government contractor, the awarding agency may require a licensed CPA firm to perform agreed upon procedures on your indirect costs for a specific time frame to determine if the rates and cost principles used are in compliance with current regulations. The auditor’s findings will help you develop a comprehensive indirect cost allocation plan and a job cost accounting system – both critical to winning and keeping Government contracts.
  • Limiting scope: This will reduce fees while maximizing the benefits of the review.

Resources

SSAE 16 Professionals has assembled top tier leadership to help our clients through the Agreed Upon Procedures process. For further information regarding these services, or to request a fee proposal from SSAE 16 Professionals, please visit our Contact Us page to submit an informational form or call 1-866-480-9485 today. We look forward to hearing from you!