What are Agreed-Upon Procedures?

When businesses perform certain functions, such as purchasing additional businesses, certain procedures need to be put into place. Specified procedures are written and based upon what the client needs. These are called agreed-upon procedures (AUP) and these steps help set specificity within the transaction.  AUPs are put in place and provide a test, analysis, or procedure related to any structure matter.

AUPs are utilized as a check on internal controls. Together with an audit professional, a business will work to examine pertinent material for the transaction, report upon findings, and then establish the organized methodology for completing the procedures – thus, the agreed-upon procedures (AUP). Some areas that are considered for AUPs are confirming bank balances to a date, reviewing bank reconciliations, comparing financial records to source documents, reviewing internal controls and accounting systems, confirming accounts receivable to accounts payable, and operational consulting. An AUP can provide enough specific, factual data, and conclusions for the entity while remaining flexible.

When AUPs Can Be Used

One prime area where an Agreed-Upon Procedure can be used is to assist with detecting current fraudulent activity.  It is a fairly simple process, that requires only that you discuss areas of concern with your current audit professional. Areas where an AUP might be utilized are suggested above but could also include inventory discrepancies and questions of productivity on direct labor. Within the concerns that you have, your audit professional can create and perform tests with you in order to generate reports that will highlight the areas. AUPs are beneficial to businesses, because owners and CEOs are able to choose the parameters of the test or analysis and then results are calculated based upon the specific data that you are desiring. The AUP is distinct from an audit in that it is conducted in conjunction with you, instead of within your establishment. Results from an AUP are also shared with you, instead of kept by the audit professional.

The Baird Audit Group

Choosing to go the route of the AUP may still merit some questions from you. If something feels off within the organization and finances of your company, do not hesitate to reach out with questions. The Baird Audit Group has assisted customers with auditing services, including AUPs since 1927. We are available to assist you in establishing agreed-upon procedures within your business today. Our offices are located at the Columbia Road Professional Centre, 4210 Columbia Rd., Bldg. 10 in Augusta, GA, or feel free to contact us via our website, or by calling us today at 706-855-9500.