What is agreed upon procedure?
An agreed-upon procedure is a requirement a firm or client describes when it utilizes an external occasion to do an audit on a specific examination or company procedure. The therapies, called audit standards, are made and agreed upon by the entity performing the audit, in addition to any sort of perfect 3rd parties.
The auditor’s report on the searching is usually limited to those occasions that developed the agreed-upon treatments due to the uniqueness of the desired outcomes. For instance, agreed-upon treatments may be created by one entity that is thinking about purchasing an added service. Investing in commodity would likely establish the agreed-upon treatments to aid determine specific monetary or various other info regarding service it may get.
In an audit carried out under agreed-upon treatments, the auditor supplies only accurate searchings for and does not supply points of view, final thoughts, or assurances in the last report. Instead, the auditor’s report simply offers the truths, with the audit facilitators attracting their really own final thoughts from the searching.
When accomplishing agreed-upon treatment participation on historical financial details, experts should, as a minimum, follow ISRS 4400 Communications to Perform Agreed-Upon Procedures Concerning Monetary Details. ISRS 4400 additionally supplies helpful support for involvements relating to non-financial details.
For an entity with no outside need for an audit of official assurance point of view based on guarantee demands, agreed-upon treatments over information hazards in financial or non-financial info can be a cost-efficient way of getting comfortable for the preparer. This can be supplemented with professional views, though not with a formal guarantee point of view if the extent of the task is AUPs.
Examples of AUPs for the preparer’s use only
| SUBJECT MATTER | RISK | AUPS | PROFESSIONAL VIEWS |
| Stock | Existence. Fraud. | Tests of controls. Sample counts. Three-way matching. | Observations on age and condition of stock. Robustness of client’s own count process including competence of employees. Control recommendations |
| Fixed assets | Existence Fraud | Vouching physical existence at remote sites, including serial numbers. Evidence of utilisation of assets. | Consideration of any lease terms restricting use. Control recommendations |
| Payroll | Accuracy. Completeness. Compliance with law and regulations. | Checking calculation. Agreeing pay to contracts and timesheets. Checking evidence of employee existence. | Unusual trends in timesheets/absences. Control recommendations. |
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