An agreed upon procedures engagement applies specific tests that you and the report user select, and reports the factual findings without an opinion. CLA Emirates performs these under ISRS 4400 for lenders, investors, franchisors, regulators and internal management.
Understanding an agreed-upon procedures engagement
An agreed-upon procedures engagement is one in which the practitioner performs procedures agreed in advance with the engaging party and reports the findings as facts, without expressing any assurance conclusion.
An ISRS 4400 engagement is defined entirely by its scope. If the agreed procedure is to confirm ten supplier balances, the report states what was found for those ten and nothing more. The user draws their own conclusion, which is why the procedures must be specified precisely before work begins.
AUP vs Audit
An audit gives an opinion on financial statements as a whole; an AUP gives factual findings based on agreed procedures and expresses no opinion or conclusion at all.
That difference decides which one a third party will accept. A registrar or bank asking for assurance over a full set of accounts will not accept an AUP. A party who wants a specific number verified quickly, without the cost of a full audit, usually will.
Contents of an AUP report
An AUP report UAE users receive sets out:
- The agreed procedures
- The findings for each
- A statement that no assurance is expressed
- A restriction on distribution to the named parties
When agreed upon procedures are the right choice?
An agreed-upon procedures (AUP) engagement is designed to provide factual findings on specific financial or operational matters identified by the engaging parties, rather than an overall audit opinion. Businesses in the UAE commonly engage practitioners for AUP engagements to verify matters such as royalty calculations, compliance with financial covenant ratios, inventory counts, payroll reconciliations, or grant expenditure claims. Where the scope is limited to a clearly defined issue, an AUP engagement can often be completed more quickly and cost-effectively than a full audit, while delivering focused and objective findings tailored to the agreed procedures.
Typical AUP subject matter
- Royalty, commission and turnover rent calculations
- Bank covenant ratios and facility compliance
- Physical inventory counts and stock reconciliations
- Payroll, WPS and end-of-service benefit reconciliations
- Grant and programme expenditure claims
- Supplier and customer balance confirmations
- Cash and petty cash verification at a specified date
