Is an agreed-upon procedures engagement right for you?

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agreed-upon procedures, audit, assuranceRecently, we covered the differences between audits, reviews and compilations. Those aren’t the only types of engagements our audit and accounting group performs. We provide various agreed-upon procedures and consulting engagements for several clients. Not only can these be a better fit to clients in certain situations, they can be less costly as well.

Agreed-upon procedures

In an agreed-upon procedures engagement, we perform specified procedures outlined by your company. These are not subject to judgement on our part. We issue a report that describes the procedures and the resulting findings. These procedures could be performed on your company or another company, depending on your needs. An agreed-upon procedures engagement may also arise when you provide information to a third party, such as a bank or regulatory agency, and the third party wants to enhance the credibility of the information through our involvement.

In both cases, the sufficiency of the procedures is the responsibility of the users of the agreed-upon procedures report. While we may advise as to what type of procedure could be performed, the nature and extent of the procedures are specified to us.

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Consulting engagements

Consulting engagements can be an alternative to agreed-upon procedures when just your company is the beneficiary of the engagement (i.e. there are no other users of the information). In this scenario, we are not adding any credibility to the subject matter. For consulting, we are often engaged to generate information and present our findings, conclusions and recommendations to you. There are no formal reporting requirements as seen with an agreed-upon procedures engagement. Furthermore, since there are less stringent requirements, a consulting engagement may offer more flexibility in the procedures that we perform.


To better understand the difference between the two, here are two examples of each engagement that we have performed.

A company needs a managed review under state requirements to receive final approval on certain tax credits earned for capital investment and new job creation. The managed review requires certain procedures to add credibility to the amount of capital investment and new job created at the company. The company specifies certain procedures that we perform that meet the requirements of the managed review. This is structured as an agreed-upon procedures engagement.

Our client has recently been sold and the new owners want to get an understanding of the aging of inventory as of the acquisition date and identify potential slow-moving inventory. As part of the consulting engagement, we determine certain procedures to perform and provide the owners with information regarding significant aged inventory and inventory with low usage that may be considered slow-moving and should gather further attention.

Whether to perform an agreed-upon procedures or consulting engagement depends on the facts and circumstances. We are happy to discuss the available options to figure out what is best for your needs.

Jonathan Poppel, CPA