Agreed-Upon Procedures

An Agreed-Upon Procedures (AUP) engagement is one in which a licensed CPA firm, such a Morice & Layton, is engaged by a client to issue an independent report of findings based on specific procedures performed on specified subject matter. Agreed-Upon Procedures engagements are covered under the attestation standard AT Section 201, promulgated by the American Institute of Certified Public Accountants (AICPA).

The key elements in an Agreed-Upon Procedures engagement are:

  • Independent report issued by a licensed CPA
  • Client is responsible for the sufficiency of the procedures
  • Scope of engagement is limited only to the performance of the procedures

Examples of AUPs might include special reviews of a loan portfolio or internal control systems. The users of reports based on agreed-upon procedures must draw their own conclusions on the results of the tests reported. For example, Morice & Layton could be asked to look at a certain number of mortgage loan files and document which of the required forms are present. The auditor would report on the selection and the results of the procedures performed, but would not provide a formal opinion with conclusions drawn from the results of the procedures.

Additional situations where an Agreed-Upon Procedures engagement would be warranted include:

  • An entity’s compliance with requirements of specified laws, regulations, rules, contracts, or grants during a specified period.
  • A representation by management that all investment securities owned by an entity during a specified period were traded on one or more of the markets specified in the entity’s investment policy.
  • A statement that the documentation of employee evaluations included in personnel files as of a certain date is dated within the time frame set forth in the entity’s personnel policy.
  • The cash accounts, as of a certain date, are represented as being in accordance with generally accepted accounting principles.
  • A schedule of accounts receivable of an entity is represented to reflect accounts receivable presented in conformity with generally accepted accounting principles.