Agreed Upon Procedure
An Agreed-Upon Procedure (AUP) engagement is a process where the auditor performs specific procedures of an audit nature on which the auditor, the entity and any appropriate third-party agree and produce factual findings. The parties that received the report arrived at their conclusions based on the report submitted by the auditor. Companies can consult with Al Fakher Accounting to avail of the best agreed-upon procedure services in Dubai.
It is important to note that the auditor’s report will be restricted to the parties who have agreed to the procedures. This restriction is essential to prevent potential misinterpretation by others who are not aware of the reasons for the procedures. Agreed-Upon Procedures also increase the credibility of the information submitted to third parties including banks, regulatory agencies, potential investors, or buyers.
Performing Agreed-Upon Procedures in UAE
When auditors are hired for a specific test or process, they agree on the engagements about to be performed. Such agreed-upon procedures are performed during certain special situations, which include acquisitions, lenders wanting a report on the borrower’s finances, landlords looking for a report on tenant’s finances, a status review of a company or advice on financial structure, evaluation of operational efficiency, processes, etc. Choose Al Fakher Accounting, providing the best agreed-upon procedure services in Dubai, to carry out any sort of business procedure.
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Scope of an Agreed-upon Procedure Engagement
Auditors may follow procedures similar to an audit for carrying out an Agreed-upon Procedure engagement. However, they use audit-like procedures on a limited scale. Such procedures are used to identify specific problems that warrant urgent action or specific actions for which the audit procedures are agreed. While carrying out an Agreed-Upon Procedure engagement, the auditor doesn’t make any formal opinion. Instead, the auditor serves as a fact finder.
The auditor prepares a report that contains the procedures carried out and the auditor’s findings. The responsibility to infer conclusions from the report falls on the shoulders of the user. The Agreed-Upon Procedure engagements may target aspects such as financial data, non-financial information (such as a review of internal controls or compliance with royalty agreements), a specific financial statement, or a complete set of financial statements. For trusted AUP services in Dubai, consult Al Fakher Accounting.
Examples of Agreed Upon Procedure Services
Agreed Upon Procedure services (AUPs) encompass both financial and non-financial information. Some common examples of Agreed Upon Procedure engagements include:
Due diligence carried out before buying or selling businesses
Verification of cash balance
Checking security balances
Tax provisions
Accounts receivable/payable processes
Special reviews of loan portfolios
Reviews of internal control management systems
Royalty agreements compliance
Employer compliance/payroll audits
Purchasing department compliance
What’s Involved in an Agreed-Upon Procedure?
While carrying out an Agreed-Upon Procedure, the auditor simply provides a report containing the factual results of the procedure. This means the auditor expresses no assurance, as the conclusions are drawn by the users of the report. The Agreed-Upon Procedure may comprise the following, depending on what has been agreed:
The auditor checks the addition of the trial balance of accounts payable prepared by the entity at a specific date and compares the total to the balance in the related general ledger account.
The auditor compares a list of top suppliers and the amounts owing at a particular date to the related names and amounts in the trial balance.
The auditor obtains the suppliers’ statements or requests the suppliers to confirm balances owing at a specific date. The auditor then compares such statements or confirmations to the amounts in the trial balance. In the case of discrepancies, the auditor obtains and reviews reconciliations from the entity.
Advantages of Carrying Out Agreed-Upon Procedures
Carrying out an Agreed-Upon Procedure provides varied benefits to businesses in the UAE. These procedures can be conducted any time of the year, and the resulting reports can be relied upon by third parties. Moreover, businesses have the flexibility to choose only the procedures they deem necessary—helping reduce costs.
Agreed-Upon Procedure engagements are especially useful in the following situations:
Merger & Acquisitions Due Diligence
When business owners suspect their employees of misrepresenting financial results
To determine compliance with specific regulatory requirements
Additionally, lenders or franchisors often request Agreed-Upon Procedure services if they want to:
Clarify doubts or questions regarding a company’s financials
Assess the effectiveness of internal controls
Monitor the progress of a distressed company’s turnaround plan
The Best Agreed-Upon Procedure Services in Dubai, UAE
Agreed-Upon Procedure Services are essential for all types of businesses, including large corporations and SMEs. Even companies not requiring a statutory audit may benefit from AUPs to satisfy banking or vendor requirements.
When it comes to availing of the best Agreed-Upon Procedure Services in the UAE, look no further than Al Fakher Accounting. Our team of highly qualified audit professionals performs Agreed-Upon Procedures with precision to produce reliable factual findings. Al Fakher Accounting offers specialized financial reporting tailored to meet your business needs and assist you in evaluating your accounting records.