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 auditors 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 operational efficiency, processes etc. Choose the auditors providing the best agreed-upon services in Dubai to carry out any sort of business procedure.
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 / 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. And 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.
Examples for 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 of the following and the same is mainly dependent on the Agreed-Upon procedure:
- 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 performing the Agreed Upon Procedures 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 amounts that don’t agree, the auditor obtains and reviews reconciliations from the entity.
Advantages of Carrying Out Agreed Upon Procedure
Carrying out an Agreed Upon Procedure provides varied benefits to businesses in the UAE. The Agreed Upon Procedures can be carried out any time of the year. The report generated after the Agreed Upon engagements can be relied on by third parties as well. Moreover, businesses have the freedom to choose procedures deemed necessary for their organisation. This flexibility to choose helps businesses to reduce the cost of Agreed-Upon Procedures as well.
Specifically, Agreed Upon Procedure engagements will be advantageous be useful in the circumstances listed below:
- Merger & Acquisitions Due Diligence
- When business owners suspect their employees of misrepresenting financial results
- To determine compliance with specific regulatory requirements
Apart from being useful in those situations, lenders or franchisors often request an Agreed Upon Procedure service if they want to clear their doubts or questions regarding a company’s financials, or to check how effective a company’s internal controls are. They may also enlist Agreed Upon Procedure services in case they wish to assess 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 big entities and SMEs. Even the companies that do not require an audit will benefit from Agreed Upon Procedures for various purposes such as 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 Jitendra Chartered Accountants (JCA). JCA is composed of a highly qualified team of audit professionals who can perform Agreed-Upon Procedures to prepare and produce factual findings. JCA provides specialized financial reporting catering to all our client’s business needs to help them in evaluating their accounting records.
Find JCA UAE Audit, Leading Accounting Firms for VAT in Dubai, for more information, Inquire us today.