In December 2019, the American Institute of Certified Public Accountants (AICPA) revised its attestation standards to eliminate certain requirements for Agreed-Upon Procedures (AUP) engagements, thereby expanding the types of situations these engagements can be performed by independent accountants.
An AUP engagement is an attestation engagement in which a company engages an independent accountant to perform specific procedures on a subject matter and report its findings without providing an opinion or conclusion. The subject matter may be financial or nonfinancial information and the nature, timing, and extent of the procedures may vary based on the needs of the company requesting the AUP engagement. Examples of purposes for AUP engagements include helping customers, suppliers, regulators and other users assess a company’s compliance with its own policies, generally accepted accounting principles in the United States (U.S. GAAP), contractual terms or government regulations.
The revised standards change the nature of an AUP engagement by requiring only the engaging party to agree with the procedures, eliminating the requirement that the accountant request a written assertion from the intended users of the AUP report agreeing to the suitability of the procedures. However, the intended users of the AUP report can still be asked to agree with the procedures, and use of the AUP report can still be restricted to such specified parties.
The revised standards also require new disclosures in all AUP reports that are intended to address the risk that the reports could be misunderstood by users. In the AUP report, the accountant must disclose that the procedures performed may not address or meet the needs of all users. As such, users of the AUP report are responsible for assessing the appropriateness of the procedures for their purposes. In addition, accountants are no longer required to restrict the use of AUP reports to specified parties, allowing these reports to be used by companies to communicate information to a broader number of parties.
The revised standards are effective for AUP reports dated on or after July 15, 2021. However, early implementation is permitted. The revised standards are available here.