Strong numbers matter. A stronger position matters more.

You’re confident in your finances, efficient in your operations, and you stay up to date with compliance. The question is: how do you prove it to stakeholders who matter – without spending months and tens of thousands of dollars on a full financial statement audit you don’t actually need?

That’s where Agreed-upon Procedures, or AUPs, come in.

Assurance Isn’t One-Size-Fits-All

Most business owners hear “assurance service” and immediately think “audit.” It’s understandable – audits are the most well-known assurance service. They’re also the most comprehensive, time-intensive, and expensive.

But assurance should really be considered a toolkit – one where financial statement audits, reviews, compilations, and agreed-upon procedures each serve different purposes. The key is matching the right tool to what you’re actually trying to accomplish.

Think of it this way: you wouldn’t use a sledgehammer to hang a picture frame. The same principle applies here.

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. Instead of examining your entire financial picture, an AUP engagement focuses only on what you and the other party have agreed needs to be tested.

Let’s say you’re requesting a lender to increase your credit line, but the lender requires confirmation of your debt-to-equity ratio and cash flow projections. You wouldn’t need a full audit, just a targeted verification of those specific numbers.

Now let’s say you’re buying a business and need to confirm the seller’s revenue claims match their actual transaction records. An agreed-upon procedures engagement evaluates exactly that – nothing more, nothing less.

The result is faster turnaround, lower cost, and targeted information the requesting party sought to make informed decisions.

When Agreed-upon Procedures Make Perfect Sense

AUP engagements are especially useful when verification is required, but a full audit would be overkill. Here are a few scenarios where this assurance service delivers exactly what’s needed:

The Banking Scenario

Your company is growing. You need to increase your line of credit to fund expansion, but your bank wants verification of specific financial metrics before they’ll approve the increase. They need to see confirmed cash flow numbers, debt ratios, and maybe an assessment of your internal controls around financial reporting.

A full audit would take months, and cost significantly more than the credit increase is worth. An agreed-upon procedures engagement can verify precisely what the bank needs in a fraction of the time and cost.

The Licensing Compliance Question

You have a licensing or royalty agreement. You’re required to report revenue from licensed products and pay royalties accordingly. You think you’re compliant and confident you’ve calculated everything correctly.

But licensing agreements often have complex terms, and revenue classifications can be tricky. One misinterpreted clause could mean you’ve been underpaying – or overpaying – for years.

An AUP engagement focused on compliance testing verifies that your calculations align with the agreement terms. You gain clarity, your licensor gets verification, and both avoid the expense of a full audit.

The Due Diligence Reality Check

You’re on the buy-side or sell-side of a transaction. The deal is moving forward, but the other party wants independent verification of specific claims. This could include revenue numbers, quality of earnings, or confirmation that certain contracts are actually in place.

Due diligence often requires transaction document review, third-party confirmations, or verification that projections are based on reasonable assumptions. Agreed-upon procedures give both parties confidence without derailing the deal’s timeline with a lengthy audit process.

The Investor or Lender Ask

You’re raising capital. Investors are interested, but they want verification of your internal rate of return calculations, your cash flow projections, or your working capital position. They’re not asking for audited financials, just evidence of key metrics to guide their investment.

An AUP engagement addresses exactly what they need to see. 

The Strategic Advantage of Targeted Assurance

The beauty of agreed-upon procedures is the precision. You’re not paying for a comprehensive examination of every line item in your financial statements. You’re paying for verification of exactly what matters to the person or entity requesting it.

This makes AUP engagements especially valuable when:

• Time matters. Full audits take months. AUP engagements can often be completed in weeks.
• Cost matters. You’re spending money on exactly what’s needed, not on comprehensive coverage you don’t want.
• Flexibility matters. The scope is defined by what you and the requesting party agree upon. It can be as narrow or as broad as the situation demands.

Agreed-upon procedures also work well when you need to verify internal controls, compare your historical results and industry trends to forecasts, or prepare projection models for financial performance. These are targeted questions that deserve targeted answers.

Choosing the Right Assurance Service for Your Situation

The question isn’t whether you need assurance; the question is which type of assurance service actually serves your specific needs.

Sometimes you do need a full audit. If you’re preparing to go public, if your investors require audited financials, or if regulatory requirements mandate it, there’s no substitute.

But in many situations – banking relationships, deal transactions, compliance verification, investor due diligence – agreed-upon procedures give you exactly what you need: targeted verification, independent confirmation, and professional credibility, all without unnecessary time or costs.

Strong numbers give you a solid foundation. The right assurance service gives you the proof to back them up.

Talk to Us About Your Assurance Needs

Not sure which assurance service fits your situation? We can help you figure it out. Our team has over 20 years of experience across 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.