What are Agreed Upon Procedures ? | Virtual

1. What are Agreed Upon Procedures? It must be noted that agreed upon procedures are those that empower an auditor to engage in audit procedures that all parties concerned (client entities as well as third party dealers) agree beforehand! These procedures are called as audit standards, and are agreed upon by all parties. Agreed upon Procedures (AUP) are usually developed by one entity that is considering purchasing another business. The purchasing entity generally develops procedures to ensure that the business it acquires may be developed in a monetary way or any other way. The buying entity can engage an audit to determine specific aspects of the business it is buying. These may include but are not limited to vendor contracts, loan portfolios, and many other things thereof. Agreed upon procedures are important because they can instruct the auditors on what information they are seeking, to get the ?facts?, so that they can draw their own conclusions. The ?agreed? aspect can be any business information. This aspect is usually never all of the business financials. It is the job of the auditor not to engage in any conclusion, but to just state the ?raw? facts as they are!

2. Benefits: This is beneficial for companies that have concern about one financial aspect while all the other financial aspects are okay. This means that an entire audit is not necessary but rather an attention to just one part or aspect of the audit. A variety of records can be selected to be studied and also to narrow down the field considerably. Therefore, you can focus on a particular area of interest. Because agreed upon procedures are not an official audit, the company has the say about the extent to which it is performed. This results in less costs in the long run. Better accounting practices are a result of the neutral facts stated from an AUP. Hence specialized reports are created. AUPs are flexible, and different firms use them for different purposes. As an organization, the client is in the driver?s seat to perform all of the AUPS. This results in seeing the exact results and set thresholds for various parameters and variables. It should be stated clearly that an agreed upon procedure can be easily bundled along with an audit, whenever the situation demands it. It is very convenient to do so.

3. As you can see from all of the above, an agreed upon procedure is utmost necessary for the proper systematic growth of the organization. It is in fact a trump card for the organization to mature at its own pace!