Agreed-upon procedures (AUP) engagements are a flexible form of CPA service where the practitioner performs only the specific procedures that the client (and other specified parties) have agreed to, and reports the factual findings.
What Are Agreed-Upon Procedures?
In an AUP engagement, the CPA:
- Performs only the procedures specified in the engagement agreement
- Reports factual findings from those procedures
- Does NOT express an opinion or conclusion
- Does NOT provide assurance of any kind
- Users draw their own conclusions from the findings
Common AUP Applications
Financial
- Verify specific account balances
- Test compliance with debt covenants
- Reconcile specific records
- Verify royalty or franchise fee calculations
Compliance
- Test adherence to grant requirements
- Verify regulatory compliance
- Check contract compliance
- Assess internal policy adherence
Operational
- Evaluate specific internal controls
- Verify specific KPI calculations
- Test data integrity for specific systems
- Assess vendor compliance with SLAs
Transaction Support
- Due diligence procedures
- Working capital adjustments
- Earn-out calculations
- Purchase price allocation verification
How AUP Differs from Other Services
| Aspect | AUP | Audit | Review |
|---|---|---|---|
| Procedures | Only those agreed upon | Comprehensive | Limited |
| Conclusion | Factual findings only | Opinion | Limited assurance |
| Scope | Narrow and specific | Broad | Moderate |
| Users | Specified parties | General use | General use |
| Flexibility | High | Low (standards-driven) | Moderate |
AUP Report Structure
- Identification: Parties to the agreement
- Subject matter: What was examined
- Procedures: Exactly what was done (step by step)
- Findings: Factual results of each procedure
- Restriction: Report restricted to specified parties
- No opinion: Explicit statement that no assurance is provided
Recent Changes (SSAE 19)
The AICPA updated AUP standards to:
- Allow general use (no longer restricted to specified parties)
- Permit practitioner to develop procedures
- Expand applicability beyond traditional attestation
- Modernize reporting requirements
Best Practices
- Define procedures precisely: Ambiguity leads to disputes
- Document agreement: All parties must agree to the procedures before engagement
- Report objectively: Present findings without interpretation
- Distinguish from audit: Ensure users understand the limited nature of AUP