Agreed-Upon Procedures | Grobstein Teeple

Agreed-Upon Procedures: How An AUP Engagement Can Meet Your Needs

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What Agreed-Upon Procedures Actually Are

Agreed-upon procedures (AUP) engagements let you zero in on specific accounting records, financial data, or business processes that need verification. Whereas a certified audit provides a relatively high level of confidence in financial statements as a whole, an AUP allows parties to conduct specific procedures on an isolated issue within the financial statements.

When Agreed-Upon Procedures Make Perfect Sense

Here are a few situations where an AUP engagement delivers exactly what’s needed:

The Licensing Compliance Question

You are the licensor in a licensing or royalty agreement, and are concerned that the licensee is not calculating and remitting royalties appropriately. A CPA can conduct an AUP engagement with specific procedures to test the veracity of the amounts being paid by the licensee. Such procedures could include reviewing the licensing agreements, testing the sales by the licensee, recalculating the license percentage, and testing that the funds were paid by the licensee to you.

An AUP engagement focused on compliance testing would verify that the calculations align with the agreement terms.

The Due Diligence Reality Check

You’re the buyer of a chain of fast food restaurants. The most significant balance sheet asset is inventory. While the seller has already obtained a financial statement audit, as the buyer, you want further testing to ensure that the inventory amount listed on the balance sheet is accurate. With an AUP, specific testing procedures can be designed to conduct in-depth testing to confirm the reliability of the inventory balances.

Focused Agreed-upon procedures could provide the buyer confidence they are getting exactly what they paid for.

An Audit Stopped In Its Tracks

During the course of the financial statement audit, the auditors identify material transactions that may have been incorrectly classified by the company on the financial statements in an attempt to reduce net income and pay lower taxes. The auditors require that the company retain an independent CPA to conduct an AUP engagement to specifically address the classification of transactions associated with this matter.

Based on the independent CPA’s findings in the AUP, the auditors can proceed with their work and issue the appropriate audit report.

The Strategic Advantage of Targeted Assurance

The essence of agreed-upon procedures is in its precision. You’re focusing on exactly what matters the most in a particular scenario.

This makes AUP engagements especially valuable when:

Cost matters. You’re spending money on exactly what’s needed, not on extensive testing you don’t need.
Flexibility matters. The scope is defined by what the requesting party agrees upon. It can be as narrow or as broad as the situation demands.
Precision matters. Focusing on a specific area of concern allows the parties to narrow the scope of work to be performed.

Talk to Us About Your Assurance Needs

Our team has over 20 years of experience performing audits, reviews, compilations, and agreed-upon procedures engagements. We’ll help you identify exactly what you need – and deliver it efficiently.

Contact us to discuss your specific assurance requirements.

Business Strategy

3 Mar 2026