An Agreed Upon Procedure (AUP) engagement involves the auditor conducting specific audit-related procedures, agreed upon by the auditor, the entity, and any relevant third parties, to generate factual findings. The conclusions drawn by the parties who receive the report are based on the auditor’s submitted findings. Companies in UAE can seek guidance from auditors to access the most effective agreed upon procedure services.
It’s important to emphasize that the auditor’s report is limited to the parties that have consented to the specified procedures. This limitation is crucial to prevent potential misinterpretation by individuals who are not aware of the rationale behind these procedures. Agreed Upon procedures also enhance the credibility of the information provided to third parties, such as banks, regulatory agencies, prospective investors, or purchasers.
Conducting Agreed Upon Procedures in the UAE
When auditors are engaged for a specific examination or process, they establish agreements regarding the tasks to be conducted. These agreed upon procedures are typically carried out in specific circumstances, including acquisitions, lenders seeking financial reports from borrowers, landlords requesting financial assessments of tenants, company status reviews, financial structure advisory, evaluation of operational efficiency, and various other business processes. Opt for the services of auditors in UAE who excel in providing top-tier agreed upon procedure services for any business requirement.
Scope of an Agreed Upon Procedure Engagement
Auditors follow procedures similar to an audit when conducting an Agreed upon Procedure engagement. Nevertheless, they apply audit-like procedures on a more restricted scale, targeting particular issues necessitating immediate attention or specific actions for which the audit procedures have been agreed upon. During an Agreed Upon Procedure engagement, the auditor refrains from issuing any formal opinions; instead, their role primarily revolves around gathering factual information.
The auditor compiles a report detailing the executed procedures and the findings. It is the user’s responsibility to draw conclusions based on this report. Agreed Upon Procedure engagements can encompass various aspects, including financial data, non-financial information (like an assessment of internal controls or compliance with royalty agreements), a specific financial statement, or a complete set of financial statements.
Agreed Upon Procedure Services
Agreed Upon Procedure services (AUPs) cover a wide range of information, both financial and non-financial. Here are some typical examples of Agreed Upon Procedure engagements:
- Pre-purchase or sale business due diligence
- Verification of cash holdings
- Examination of security balances
- Tax provision assessments
- Analysis of accounts receivable/payable procedures
- Special evaluations of loan portfolios
- Assessments of internal control management systems
- Compliance with royalty agreements
- Audits of employer compliance and payroll
- Reviews of purchasing department compliance
What Does an Agreed Upon Procedure Entail?
During the execution of an Agreed Upon Procedure, the auditor’s role is limited to presenting a report that includes the factual outcomes of the procedure. It’s important to note that the auditor does not provide any assurance, as the conclusions are the responsibility of the report’s users. The scope of an Agreed Upon Procedure may encompass various elements, primarily determined by the specific agreed upon procedure:
- The auditor verifies the sum of the accounts payable trial balance as prepared by the entity on a specific date and cross-references it with the corresponding balance in the general ledger account.
- The auditor matches a roster of key suppliers along with the outstanding amounts on a specific date to the corresponding names and figures in the trial balance.
- The auditor conducting the Agreed Upon Procedures acquires statements from suppliers or solicits balance confirmations from them as of a specific date. Subsequently, the auditor cross-references these statements or confirmations with the figures in the trial balance. In instances where discrepancies arise, the auditor procures and assesses reconciliations provided by the entity.
Benefits of Conducting Agreed Upon Procedures
Conducting Agreed Upon Procedures offers several advantages to UAE businesses. These procedures can be conducted at any point during the year. The resulting report from these engagements can be trusted by third parties. Furthermore, businesses have the autonomy to select the procedures that best suit their organization. This flexibility in choice also aids in cost reduction for Agreed Upon Procedures.
In particular, Agreed Upon Procedure engagements prove beneficial in the following situations:
- Due Diligence for Mergers & Acquisitions
- When business owners suspect financial misrepresentation by employees
- Assessing compliance with particular regulatory obligations
In addition to these scenarios, lenders or franchisors frequently seek Agreed Upon Procedure services when they seek clarification or have inquiries regarding a company’s financials or wish to evaluate the efficiency of a company’s internal controls. Agreed Upon Procedure services may also be engaged when assessing the execution of a distressed company’s turnaround plan.
Top Agreed Upon Procedure Services in the UAE
When it comes to Agreed Upon Procedure services in the UAE, excellence is paramount. The top providers in the region are known for their unwavering commitment to precision and reliability. These trusted professionals offer a wide range of tailored services to meet the diverse needs of businesses, whether it’s conducting due diligence for mergers and acquisitions, evaluating internal controls, or ensuring compliance with regulatory requirements. With their expertise, clients can confidently navigate complex financial landscapes, clear doubts, and make informed decisions. In the UAE, the best Agreed Upon Procedure services are synonymous with competence, trustworthiness, and a steadfast dedication to delivering results that matter.
