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Agreed-upon procedure (AUP) engagements are widely used in many jurisdictions. Demand for AUP engagements continues to grow, particularly related to needing increased accountability around funding and grants. Changes in regulation have also driven increased demand for AUP engagements, especially from smaller entities, as increased audit exemption thresholds in some jurisdictions prompt stakeholders to look for alternative services to an audit or other assurance engagements.

In December 2019, the International Auditing and Assurance Standards Board (IAASB) approved International Standard on Related Services (ISRS) 4400 (Revised), Agreed-Upon Procedures Engagements to respond to this growing demand.

AUP Engagements

In an AUP engagement, the practitioner performs procedures that have been agreed upon by the practitioner and the engaging party. The practitioner communicates the procedures performed and the related findings in the AUP report. The engaging party and other intended users consider for themselves the appropriateness of the AUP and findings reported by the practitioner and draw their own conclusions from the work performed by the practitioner.

ISRS 4400 (Revised) promotes consistency in the performance of AUP engagements and intends to address public interest issues relevant to AUP engagements, for example:

  • Responding to needs of stakeholders—the scope is broadened to include both financial and non-financial matters;
  • Professional judgment—new requirement and application material on the role of professional judgment in an AUP engagement;
  • Independence—new requirements and application material on disclosures in the AUP report relating to the practitioner’s independence;
  • Engagement acceptance and continuance considerations—new requirements and application material addressing conditions for engagement acceptance and continuance in an AUP engagement;
  • Use of a practitioner’s expert—new requirements and application material to address using the work of a practitioner’s expert in an AUP engagement; and
  • AUP report restrictions—new application material on the practitioner’s considerations if they wish to place restrictions on the AUP report.

The revised ISRS will be effective for AUP engagements for which the terms of engagement are agreed on or after January 1, 2022. For engagements covering multiple years, practitioners may wish to update the terms of engagement so that the AUP engagements will be conducted in accordance with the revised standard.

Other Resources That Can Help You Get Ready for Our AUP Standard

With the revised AUP standard coming into effect soon, these two resources from IAASB and the International Federation of Accountants (IFAC), can help you get ready:

  • IAASB’s ISRS 4400 (Revised) Fact Sheet, which includes a high-level overview of significant changes, to help you navigate and apply the standard.
  • IFAC’s Agreed-Upon Procedures Engagements, which outlines what an AUP engagement is, identifies the benefits to clients of offering such services, and explains when an AUP engagement is appropriate. It also includes examples of financial and non-financial subject matters, six short case studies with example procedures that might be applied, and two illustrative AUP reports.
Eric Turner

Eric Turner joined the International Auditing and Assurance Standards Board in January 2019. He was nominated by CPA Canada.

Mr. Turner is the former director, auditing and assurance standards, at CPA Canada, supporting the activities of the Canadian Auditing and Assurance Standards Board. He also worked with the leadership team at CPA Canada on initiatives to enhance audit quality and provide education, guidance, and tools that support the provision of high-quality auditing, assurance and related services by the accounting profession.

Mr. Turner is a Chartered Professional Accountant (CPA), Chartered Accountant (CA) and a member of CPA Canada and the Institute of Chartered Professional Accountants of Ontario.

 

Phil Minnaar

Phil Minnaar is a former IAASB technical manager, standards development and technical projects. He joined the IAASB in 2018 and was been involved in a number of projects, in particular, ISA 315 (Revised 2019), ISRS 4400 (Revised) and the revision of ISA 500 (Audit Evidence).

Prior to joining the IAASB, Phil worked in Deloitte South Africa’s national quality and regularity office. He also served as the National Quality Control Director of Mazars South Africa (2009 – 2015) and was an inspector at the Independent Regulatory Board for Auditors (South African Audit Oversight Body) from 2005 – 2008. Phil also participated in various audit and assurance working groups and committees of the national standard setter in South Africa.