Agreed-Upon Procedures

There are times you or your business might need a CPA to attest to subject matter other than financial statements.

For example, a third party may require a professional, independent party (such as a CPA) to validate the credibility of the information provided by the client. This is common when a company needs to confirm the information from another company as part of an acquisition or merger.

Third parties may also ask for an agreed-upon procedures engagement to ensure that a service provider has fulfilled contractual obligations, or that billings and payments have been made in compliance with contract specifications.

Often, agreed-upon procedures engagements are suitable if a client isn’t sure exactly what type of service is best. Even without a third-party involved, a client may want a CPA to verify certain information or take a second look to give them peace of mind. For instance, projections of future earnings, provided by the client, could also be the subject matter of an agreed-upon procedures engagement.

In those situations, an agreed-upon procedures engagement can satisfy the needs of the client and third party, as well as limit the CPA to unnecessary risk.

Unlike a financial statement audit or review, in which the CPA determines the nature and extent of procedures in order to form an opinion, the CPA doesn’t decide or prescribe what the procedures should be in an agreed-upon procedures engagement. According to professional standards for agreed-upon procedures engagements, the “specified parties are responsible for the sufficiency (nature, timing, and extent) of the agreed-upon procedures because they best understand their own needs.” The procedures that the CPA and the parties agree to may be as limited or as extensive as the specified parties desire, but the specified parties assume the risk that the procedures might not be sufficient for their purposes. The CPA’s responsibility is to “carry out the procedures and report the findings” in a written report and in accordance with attestation standards. The recipients of the report must reach their own conclusions about the CPA’s findings.

Our agreed-upon procedures engagements strictly follow guidelines set by the Statements for Attestation Engagements (SSAE) issued by the American Institute of Certified Public Accountants.

To include recommendations from the CPA, consider a consulting engagement, which follows different professional standards and has different objectives. Typically, there is no third party involved in a consulting engagement, thus no need to adhere to the strict guidelines of an attestation engagement.