Many people search for an agreed upon procedures report example, as it helps them understand the nature of this type of report and how to present the procedures agreed upon by the parties and the actual findings reached by the professional accountant.
An agreed-upon procedures engagement is used when one or more parties need specific procedures to be performed on financial or non-financial information, and then receive a report presenting the actual findings reached, without expressing an opinion or providing an assurance conclusion.
This type of engagement is based on the International Standard on Related Services ISRS 4400, which has been adopted by the Saudi Organization for Chartered and Professional Accountants within its professional standards.
In today’s article, we review everything you want to know about an agreed upon procedures report example and answer some related frequently asked questions.
agreed upon procedures report example
An agreed upon procedures report example can be illustrated by assuming that a company contracts a certified public accountant to verify customer balances at the end of the financial year, with the aim of helping management or a financing party verify a specific set of data.
Below is a simplified, illustrative sample of how the report may be drafted; it is not a standard template ready for use in all cases:
Report on the Results of Performing Agreed-Upon Procedures
To: The management and specified stakeholders identified in the engagement letter
We have performed the procedures agreed upon with the management of [Company Name] relating to customer balances as at [Date], in accordance with the terms of the agreed-upon procedures engagement.
Our responsibility was limited to performing the specified procedures and reporting the actual findings reached, without expressing an opinion or an assurance conclusion regarding the information subject to the procedures.
Procedures Performed
The following procedures were performed:
- Obtaining a statement of customer balances as at [Date] and reconciling it with the relevant accounting records.
- Selecting a sample of customer balances in accordance with the agreed scope.
- Reconciling the balances in the sample with the supporting documents and invoices.
- Examining certain subsequent collections relating to the balances identified in the sample.
- Comparing the data in the customer statement with the data recorded in the accounting system.
- Documenting the differences that appeared during the performance of the procedures and reporting them as they are.
- Findings Reached
- Based on the specific procedures set out above, we reached the following actual findings:
- The balances of [number] customers included in the sample agreed with the accounting records.
- Differences appeared in the balances of [number] customers totaling [Amount].
- Supporting documents were found for the balances examined within the scope of the documents requested.
- Subsequent collections related to part of the balances covered by the procedures were identified.
- This report does not include any conclusion regarding the accuracy or fairness of the presentation of the financial statements as a whole.
Signature:
[Name of the Certified Public Accountant or Accounting Firm]
[Date]
[Location]
This example is simplified for illustration purposes, as the standard sets out requirements relating to determining the terms of the engagement, performing the procedures, documentation, and preparing the report. It also clarifies that the report should present the procedures performed and the corresponding actual findings.
What Are the Essential Elements of an Agreed-Upon Procedures Report?
The content of the report depends on the nature of the engagement and the agreed-upon procedures, but the report generally needs to clarify the information that enables users to understand the scope of work and the findings reached.
Among the most prominent elements it may include:
Report Title: The title should clarify the nature of the report, so that the reader can recognize that it is a report on agreed-upon procedures and not an audit report or professional opinion.
Addressee of the Report: The report identifies the parties or users who will benefit from it in accordance with the terms of the engagement and the scope of use of the report.
Subject Matter of the Engagement: The report clarifies the information or data on which the procedures were applied, such as customer balances, inventory, expenses, or compliance with the terms of a particular contract.
Procedures Performed: The procedures carried out by the accountant are described as agreed upon, while avoiding turning them into procedures not included in the scope of the engagement.
Actual Findings: The findings produced by the procedures that can be verified are presented, without turning these findings into an opinion or an assurance conclusion.
Statement That No Assurance Is Provided: One of the important elements is clarifying that an agreed-upon procedures engagement does not represent an audit or assurance process, and that the practitioner does not express an opinion on the information subject to the procedures.
The Difference Between an Agreed-Upon Procedures Report and an Audit Report
An agreed-upon procedures report differs from an audit report in the nature of the engagement and the result provided by the accountant.
In an audit, the auditor evaluates audit evidence in accordance with the requirements of the standard to reach a professional conclusion and express an opinion on the financial statements within the scope of the audit engagement.
In agreed-upon procedures, on the other hand, the practitioner performs specific procedures agreed upon in advance, and then provides a report on the actual findings that appeared during the performance of those procedures, without expressing an opinion or an assurance conclusion.
Therefore, agreed-upon procedures can be used when the users’ need is specific, such as examining a particular item or verifying a specific set of transactions instead of performing a full audit.
The Importance of an Agreed-Upon Procedures Report for Companies
The report helps companies and stakeholders obtain factual and specific information about a particular matter without necessarily having to perform a full audit.
The procedures can also be designed according to the users’ needs, which gives this type of engagement a degree of flexibility in determining the scope of work.
For example, an establishment may need to verify a specific set of customer balances before completing a commercial transaction, or a financing party may request specific procedures on certain information;
In these cases, an agreed-upon procedures report can be a means of showing the findings reached by the practitioner based on the specified procedures.
The Importance of Complying with ISRS 4400
The International Standard on Related Services ISRS 4400 sets out a professional framework for agreed-upon procedures engagements and addresses aspects such as the terms of the engagement, the performance of procedures, the use of an expert’s work when needed, and the preparation of the report and documentation.
The revised version of the standard became effective for engagements whose terms were agreed upon from January 1, 2022.
In Saudi Arabia, the Saudi Organization for Chartered and Professional Accountants provides the Arabic version of the standard within its professional standards, which makes referring to the approved text important when preparing an actual report or designing an agreed-upon procedures engagement.
Agreed-Upon Procedures Report from CLA
An agreed-upon procedures report is one of the professional reports that clarify the results of performing predetermined tests and procedures on certain items or financial data, in accordance with a scope agreed upon with the client.
CLA performs these procedures and presents the actual findings objectively and transparently, without expressing a professional opinion, in compliance with the requirements of International Standard No. (4400).
Accordingly, the report may include, for example, the results of verifying specific balances or financial transactions, with a clarification of the procedures performed and the findings reached by the certified public accountant, helping the relevant parties evaluate the information and make appropriate decisions.
Frequently Asked Questions About an agreed upon procedures report example
Does an agreed-upon procedures report include an opinion from the accountant?
No, the accountant’s role is limited to performing the agreed-upon procedures and presenting the actual findings without providing an opinion or assurance.
Can agreed-upon procedures be used to examine non-financial information?
Yes, they can be applied to financial and non-financial information in accordance with the revised ISRS 4400 and the appropriate professional conditions.
Are agreed-upon procedures a substitute for an audit?
No, they differ from an audit and do not include providing an opinion or assurance; they are limited to presenting the results of the specified procedures.
Who determines the procedures to be performed?
They are agreed upon between the relevant parties, and are clearly specified to ensure they are performed and their results are reported objectively.
Can an agreed-upon procedures report be used to obtain financing?
Yes, some financing parties may request this report to support their decisions, and its acceptance depends on the requirements of the beneficiary party.
Here we have reached the end of the article, in which we reviewed a range of information about an agreed upon procedures report example. You can contact us at CLA to obtain a range of our services.
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