Matching the Service to the Need: Where Agreed-Upon Procedures Fit

Key Takeaways

• An agreed-upon procedures (AUP) engagement is a service in which a CPA performs specific procedures on identified subject matter and reports the findings without an opinion or conclusion.
• Unlike an audit, review, or examination, an AUP engagement provides no assurance, and the CPA does not interpret what the findings mean for users.
• AUP engagements work well for narrow, well-defined requests, such as recalculating a working capital adjustment or comparing grant expenditures to supporting documentation.
• Effective AUP procedures use action words such as compare, recalculate, inspect, or agree rather than wording that implies a conclusion.
• Before finalizing the scope of an AUP engagement, the parties should define its purpose, the records to be used, and the intended users of the report.
• Organizations that need an opinion or assurance over subject matter as a whole should consider an audit, review, or examination instead.

Finance teams are often asked to respond to targeted requests for information, such as whether selected inputs to a calculation agree with specified records, whether components of a schedule agree with underlying support, or whether certain attributes are present in a defined population. Before deciding what type of service is needed, it helps to start with the question the users are trying to answer.

In some cases, users need an opinion, a conclusion, or assurance over broad information. In other cases, they need to address a more specific purpose, and that purpose can be addressed through clearly described procedures and a report of the related findings. That is where an agreed-upon procedures (AUP) engagement may fit.

What Is an Agreed-Upon Procedures Engagement?

In an AUP engagement, the CPA’s role is limited to carrying out specific procedures on identified subject matter and reporting the resulting findings. The subject matter may be financial, operational, or compliance-related. The resulting AUP report is limited to the procedures performed and the related findings; it does not include an opinion or conclusion on the subject matter.

This type of engagement works best when the users can clearly identify the purpose of the request, and that purpose can be translated into procedures. The CPA may compare information, recalculate amounts, inspect documents, or perform other specified procedures.

The defining feature of an AUP engagement is that the CPA reports only the procedures performed and the findings obtained. If users need the CPA to evaluate the subject matter as a whole, interpret the significance of the findings, or provide assurance, an opinion, or a conclusion, another service should be considered.

How Does an AUP Compare to an Audit, Review, or Examination?

The service should match the purpose of the request. A helpful starting point is to ask what the users are trying to accomplish and whether that purpose requires prepared information, assurance, an opinion, a conclusion, or findings from specific procedures.

This comparison helps frame the initial discussion. Before selecting a service, the parties should identify what the users need from the CPA’s work: compiled information, limited assurance, an opinion, or factual findings from specific procedures. That distinction helps determine whether an AUP engagement is appropriate or whether a compilation, review, audit, or examination better fits the request.

Common Examples of Agreed-Upon Procedures

AUP engagements are most useful when the request is narrow, the information to be tested is identifiable, and the procedures can be described clearly enough for the CPA to perform and report on. Examples may include:

• Comparing selected key performance indicators or operating metrics included in a board or investor package to specified schedules or system-generated reports.
• Comparing selected grant expenditures to the requirements or supporting documentation specified by a foundation or government agency.
• Comparing selected components of a management fee, shared-service charge, or cost allocation schedule to the methodology and supporting records specified by the parties.
• Performing specified procedures on selected accounts, balances, or transactions in connection with a business purchase or sale.
• Recalculating amounts tied to a purchase agreement, such as a working capital adjustment, using the information and methodology specified by the parties.
• Comparing selected items related to a specific internal process — such as expense reimbursements or billing activity — to the attributes specified by management.

In each example, the value of the engagement comes from clarity. The parties identify the purpose of the engagement, translate that purpose into specific procedures, and the CPA reports the findings obtained from performing those procedures.

How to Scope an AUP Engagement

The usefulness of an AUP engagement depends on how well the need can be translated into procedures. If the procedures are too broad, too vague, or written like objectives, the report is unlikely to give the users the information they expected. Before finalizing the scope, consider the following:

• Clearly identify the purpose. Be specific about the purpose the users are trying to address and what information they need from the procedures and findings.
• Write procedures as actions. Use words such as compare, recalculate, inspect, or agree, rather than wording that implies assurance or a conclusion.
• Define the information to be used. Identify the records, schedules, criteria, or calculations that the CPA will use when performing the procedures.
• Be clear about the users. Determine who will use the report and whether any restrictions on its use are appropriate.
• Keep the limitations visible. Be clear that the report provides procedures and findings, not assurance.
• Involve the CPA before the scope is final. Early discussion can help make the procedures clear, performable, and aligned with the users’ needs.

Choosing the Right Service for the Request

An AUP engagement is not a substitute for assurance when assurance is needed. Its value is different: it turns a focused request into clear, performable steps and a factual report of what the CPA found. For finance teams, an AUP engagement can be a practical way to match the CPA’s work to the users’ actual needs.

This article was prepared with AI assistance and edited and enhanced by EisnerAmper professionals for accuracy and completeness. All technical content, analysis, and recommendations reflect the knowledge of our team.