Agreed-Upon Procedures
An Agreed-Upon Procedures (AUP) audit is a type of engagement in which an auditor carries out specific procedures that have been pre-established in coordination with the client. Unlike standard audits, AUP engagements do not provide an overall opinion or conclusion regarding the fairness or compliance of the subject matter. Instead, the auditor presents a report outlining the factual results of the procedures performed. There are some key characteristics of AUP audits, which include:
Tailored Procedures: The procedures are tailored to address specific areas of interest and are mutually agreed upon by the client and the auditor. The scope is defined by this agreement, leaving no room for the auditor’s professional judgment in determining what to examine.
Fact-Finding: The auditor does not provide an opinion or draw conclusions about the subject matter. Rather, they present only the factual outcomes of the procedures carried out.
Limited Scope: AUPs generally have a more limited scope than a full audit, focusing on particular areas or specific transactions.
Client Responsibility: It is the client’s responsibility to assess whether the procedures are sufficient and to draw their own conclusions from the auditor’s findings.
Restricted Use: AUP reports are usually limited to the client and designated third parties, since the findings could be misunderstood by others.
When AUPs Are Used:
• Confirming particular financial details, including accounts payable, accounts receivable, or transactions with related parties.
• Verifying adherence to royalty agreements, internal controls, or certain regulations.
• Validating particular financial or operational information throughout a merger or acquisition.
• When fraud is suspected.
In conclusion, AUPs provide a flexible and cost-efficient method to obtain targeted insights into particular aspects of a business, without the extensive scope and assurance that come with a full audit.
If you have questions about AUPs, JTS Associates CPAs is here to help. Contact us at 516-877-5900.
