Agreed-Upon Procedures Report

Agreed upon procedures are the engagements associated to the agreed upon procedures to a particular accounts or elements.   The agreed-upon procedures are while the accountant is employed or hired to give a report of the findings which is based on a particular accounting statement items. The people who use the financial statement or report agree upon the methods to be performed by the accountant that the user considers are appropriate. The person who uses the report will take accountability for the sufficiency of the process or procedures.  In this agreement the accountant will not give any negative report or assurance. Rather, the report has to be in findings and procedures. Then a representation letter is created which depends on the nature of the particular users and engagement.

Scope of the Service: An engagement to apply agreed-upon procedures to prospective financial statements involves applying the procedures specified by the users of the statement and reporting the result of their application. The level of service is flexible; the accountant’s report may only be distributed to the users who specified the procedures. Thus, it is a limited distribution service.

Procedures:  The procedures applied in an engagement may be limited or extensive, depending on the users’ needs. For example, the service may consist of procedures below the level done in a compilation ( such as mere assembly) or may be similar applied to different amounts in the statements, such as a high level of work done on forecasted sales and very limited procedures  on forecasted expenses.

An accountant may perform agreed-upon procedures show engagement on prospective financial statements provided that the following some of the conditions are met:

The account is independent. The specified persons and accountant agree upon the methods and process which has to be done or to be done by the hired accountant. Generally, the accountant’s methods might be as extensive or limited as the specified persons desire, provided that the specified persons take accountability for their adequacy. However, mere reading of a financial forecast does not continue a procedure sufficient to permit an accountant to report on the result of applying agreed upon procedures.

 Questionnaire:

• What is Agreed-Upon Procedures?
• What is Agreed-Upon Procedures Report?