Businesses sometimes need specific financial or operational information to be independently checked without commissioning a full statutory audit. Agreed-upon procedures services can provide a practical solution by allowing an independent practitioner to perform procedures that the engaging party and other intended users have agreed in advance. The practitioner reports the factual findings without providing an audit opinion or assurance conclusion.
In Qatar, businesses may use these engagements for specific transactions, financial information, funding arrangements, contractual requirements, compliance checks and other targeted matters. The scope can be designed around the users’ specific information needs, making the engagement more focused than a general financial statement audit.
What Are Agreed-Upon Procedures?
An agreed-upon procedures engagement is a professional engagement where the practitioner performs specific procedures agreed with the engaging party and reports the resulting findings. The procedures can involve inspecting documents, checking calculations, comparing information, making enquiries, observing processes or performing other specific tests. The exact work depends on what the intended users need to establish.
Under ISRS 4400 (Revised), the practitioner performs the procedures agreed with the engaging party and communicates those procedures and related findings in an AUP report. The revised standard also addresses matters including professional judgement, engagement acceptance, documentation, independence requirements and the use of experts.
How Do Agreed-Upon Procedures Work in Qatar?
The process starts by identifying what information needs to be examined and who will use the resulting report. The parties then agree on the procedures before the practitioner begins the work. A typical process includes:
- Define the objective: Identify the specific financial, operational or compliance matter that requires examination.
- Identify intended users: Establish who will rely on the factual findings.
- Agree the procedures: Clearly document the procedures that the practitioner will perform.
- Collect supporting information: Management provides the records and documents required for the engagement.
- Perform the procedures: The practitioner carries out the agreed procedures and documents the work performed.
- Record factual findings: Any identified exceptions or results are documented objectively.
- Issue the report: The practitioner prepares an AUP report describing the procedures and corresponding findings.
The procedures should be sufficiently specific to allow the intended users to understand exactly what work was performed and what was found.
What Is the Scope of an AUP Engagement?
The scope depends on the requirements agreed by the relevant parties. Unlike an audit, an AUP engagement does not necessarily cover an entity’s complete financial statements. Potential areas include:
- Revenue transactions
- Expense records
- Bank balances
- Accounts receivable
- Accounts payable
- Inventory
- Payroll records
- Selected contracts
- Grant expenditure
- Specific transactions
- Financial ratios
- Internal financial information
- Regulatory or contractual requirements
An engagement can focus on a single account, a particular transaction or a broader set of financial and non-financial information.
What Are AUP Engagements Used For?
AUP engagements can support different business and stakeholder requirements where specific factual findings are needed.
Common applications include:
Financial Due Diligence
Investors or business owners may request specific procedures over selected financial information before making a commercial decision.
Funding and Grant Verification
Funding organisations may require specific expenditure or financial information to be checked and reported.
Contractual Compliance
Businesses may use AUP procedures to verify whether selected contractual requirements have been met.
Transaction Testing
Specific transactions can be checked against supporting invoices, contracts, bank records or other documentation.
Internal Management Reviews
Management may request focused procedures over particular balances or processes where additional factual information is required.
Lender Requirements
Financial institutions or other creditors may request specific procedures over selected information supporting financing arrangements.
The IAASB notes that regulators, funding bodies and creditors use AUP reports for various purposes, including supporting loan or grant applications and complementing other financial information.
Does an AUP Engagement Provide Assurance?
No. This distinction is essential when selecting an appropriate professional service. An AUP engagement does not provide an audit opinion, review conclusion or other assurance conclusion. The practitioner performs the agreed procedures and reports the factual findings.
The intended users are responsible for drawing their own conclusions from those findings. This makes an AUP engagement different from an audit or review. The engagement can be highly focused, but users should not describe the resulting report as providing assurance unless another applicable engagement has been performed.
What Is Included in an AUP Report?
The report should provide sufficient information for intended users to understand the work performed and the findings identified. Depending on the engagement, it may include:
- Purpose of the engagement
- Identification of the subject matter
- Responsibilities of the relevant parties
- Procedures performed
- Information examined
- Findings identified
- Exceptions noted
- Relevant limitations
- Independence disclosures where applicable
- Restrictions on use or distribution where applicable
ISRS 4400 (Revised) introduced greater clarity and transparency around AUP reporting, including matters relating to independence and the description of procedures and findings.
What Is the Difference Between AUP and an Audit?
Although both services involve professional examination, their objectives are different.
| Agreed-Upon Procedures | Audit |
| Procedures are agreed in advance | Auditor determines procedures based on audit requirements |
| Focuses on specified areas | Generally addresses the financial statements as a whole |
| Reports factual findings | Provides an audit opinion |
| Does not provide assurance | Provides reasonable assurance |
| Intended users assess the findings | Auditor expresses a conclusion under applicable auditing standards |
An AUP engagement may therefore be more suitable when stakeholders need specific factual information rather than an audit opinion.
Standard Applies to AUP Engagements
The principal international standard for these engagements is ISRS 4400 (Revised), Agreed-Upon Procedures Engagements, issued by the International Auditing and Assurance Standards Board. The revised standard became effective for engagements where the terms of engagement are agreed on or after 1 January 2022.
It strengthened requirements concerning professional judgement, engagement acceptance and continuance, documentation, independence considerations and reporting. For engagements performed in Qatar, businesses should also consider the applicable local professional, regulatory and contractual requirements alongside the relevant international standard.
What Documents Are Required?
The documents depend on the agreed scope and subject matter. A business may need to provide the following:
- General ledger
- Trial balance
- Bank statements
- Sales invoices
- Purchase invoices
- Contracts
- Payroll records
- Accounts receivable schedules
- Accounts payable schedules
- Inventory records
- Expense documentation
- Grant or funding records
- Relevant policies
- Regulatory documentation
Providing complete and organised records can help the practitioner perform the agreed procedures efficiently.
What are the Benefits of AUP Services?
Businesses may choose agreed-upon procedures services when they need focused factual findings over specific financial or operational information without commissioning a full audit.
Clearly Defined Scope
The procedures are agreed before the work begins, allowing the engagement to focus on specific areas.
Transparent Findings
The report identifies the procedures performed and the resulting findings rather than presenting a broad conclusion.
Flexible Application
Procedures can be designed for financial or non-financial subject matter, depending on the engagement requirements. The revised ISRS 4400 specifically broadened the standard’s application to respond to evolving AUP needs.
Useful for Stakeholders
Investors, lenders, funding bodies, regulators and management can use factual findings for their own decision-making.
Focused Examination
Businesses can request procedures over selected transactions, balances or documents instead of commissioning a broader audit.
Better Documentation
The engagement can identify missing documents, discrepancies and exceptions within the agreed scope.
When Should a Qatar Business Consider an AUP Engagement?
An AUP engagement can be appropriate when a business or stakeholder needs independent factual findings over a clearly defined matter. It may be considered when:
- A lender requests specific financial checks.
- An investor needs selected financial information verified.
- A grant provider requires expenditure testing.
- A parent company requests specific procedures.
- A contract requires factual verification.
- Management wants selected transactions examined.
- Stakeholders need information that falls outside the scope of an existing audit.
- A business wants specific financial data checked before a transaction.
The engagement should be selected based on the users’ actual requirements rather than treating AUP as a substitute for every type of assurance service.
How Can Businesses Prepare for an AUP Engagement?
Preparation can make the engagement more efficient and help reduce unnecessary delays. Businesses should:
- Clearly define the purpose of the engagement.
- Identify all intended users.
- Determine the specific information requiring examination.
- Prepare supporting documentation.
- Confirm the procedures with the practitioner.
- Assign internal staff to provide information.
- Resolve obvious data inconsistencies before the engagement begins.
- Maintain an organised document trail.
- Ensure management understands its responsibilities.
- Review the final factual findings carefully.
The quality of the engagement depends partly on how clearly the procedures are defined at the beginning.
How Much Do AUP Services Cost in Qatar?
There is no standard fee for an AUP engagement because each assignment has a different scope. The cost can depend on:
- Number of procedures
- Volume of transactions
- Complexity of the subject matter
- Number of locations
- Number of entities involved
- Availability of supporting records
- Level of specialist expertise required
- Reporting requirements
- Engagement deadline
A narrowly defined engagement involving a small number of procedures may require considerably fewer resources than a large multi-location assignment. Businesses should request a written engagement proposal that clearly identifies the scope, procedures, deliverables and professional fees.
How Long Does an AUP Engagement Take?
The timeline depends on the agreed procedures and the availability of supporting information. A focused engagement involving a limited number of transactions may be completed relatively quickly. More complex assignments involving multiple entities, locations or large transaction populations can require additional time. Factors that may affect the timeline include:
- Scope of procedures
- Transaction volume
- Quality of financial records
- Management response time
- Number of locations
- Complexity of supporting documents
- Specialist requirements
Businesses can help maintain the agreed timetable by providing complete records promptly.
How Can Audit Services Qatar Support AUP Requirements?
Audit Services Qatar can assist businesses and stakeholders with the planning and performance of agreed-upon procedures based on the specific objectives of the engagement. Support can include:
- Understanding the engagement objective
- Defining the scope
- Identifying appropriate procedures
- Reviewing supporting documentation
- Performing agreed procedures
- Documenting factual findings
- Preparing the AUP report
- Communicating findings clearly
The engagement should always be structured around the requirements of the intended users and the applicable professional standards.
Frequently Asked Questions
What are agreed-upon procedures services?
agreed-upon procedures services involve performing specific procedures that have been agreed in advance with the engaging party and reporting the resulting factual findings. They do not provide an audit opinion or assurance conclusion.
Does an AUP engagement provide an audit opinion?
No. An AUP report communicates the procedures performed and factual findings identified. The intended users evaluate those findings and draw their own conclusions.
What is an agreed upon procedures engagement service?
An agreed upon procedures engagement service involves performing clearly defined procedures over an agreed subject matter and reporting the factual findings to the relevant intended users.
How is AUP different from an audit?
An audit provides an assurance conclusion on financial statements under applicable auditing standards. An AUP engagement reports factual findings from specifically agreed procedures and does not provide an assurance conclusion.
How long does an AUP engagement take?
The timeline depends on the number and complexity of procedures, transaction volume, availability of records and the number of entities or locations involved.
How much do AUP services cost in Qatar?
Fees depend on the engagement scope, complexity, transaction volume, documentation requirements and reporting needs. A professional proposal should define the procedures and associated fees before work begins.