AUP engagements: No written assertion, no problem

Published February 24, 2020

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The AICPA’s Auditing Standards Board (ASB) issued a revised attestation standard in December 2019. It will give accountants more flexibility when performing agreed-upon procedures (AUP) engagements.

What is an AUP engagement?

An AUP engagement is a type of limited assurance engagement in which a CPA performs specific procedures on a particular “subject matter” and reports the findings without providing an opinion or conclusion. Instead, an AUP report is in the form of:

  1. Procedures, and
  2. Findings.

The subject matter covered in an AUP engagement may be financial or nonfinancial information. Examples include a statement about greenhouse gas emissions or the effectiveness of the controls for the security of a system.

The nature, timing and extent of the procedures performed in these engagements may vary. So, the engaging party must agree to the procedures and acknowledge that they’re appropriate for the engagement’s intended purpose before issuance of the AUP report.

Updated guidance — Statements on Standards for Attestation Engagements (SSAE) No. 19, Agreed-Upon Procedures Engagements — is effective for AUPs dated on or after July 15, 2021. It will supersede SSAE No. 18 AT-C section 215, “Agreed-Upon Procedures Engagements,” and amend AT-C section 105, “Concepts Common to All Attestation Engagements.” Early adoption is permitted.

What’s the biggest change?

The revised standard brings several key changes to current practice. Most notably, an accountant will be allowed to report on a subject matter without obtaining a written assertion from the responsible party that the responsible party complies with an underlying criterion, such as laws or regulations.

With some engagements, the responsible party may be the engaging party. But for other engagements the responsible party is essentially the person or group that provides the accountant with a written assertion about the subject matter. In some cases, the responsible party for the subject matter may not be readily identifiable. The AICPA felt the need to give accountants flexibility when examining or reviewing certain documents if the engaging party can’t appropriately measure or evaluate them.

How else has the attestation guidance been tweaked?

The revised standard will also:

  • Allow CPAs to develop procedures over the course of an AUP engagement,
  • Allow CPAs to develop or assist in developing the procedures,
  • Remove the requirement for intended users to take responsibility for the sufficiency of the procedures and, instead, require the engaging party to simply acknowledge the appropriateness of the procedures before the issuance of the practitioner’s report, and
  • Permit the CPA to issue a general-use report.

“In today’s increasingly complex business environment, there is a great and apparent need for auditors’ expertise in rapidly evolving subject matters,” AICPA Chief Auditor Bob Dohrer said in a statement. “By allowing the practitioner to assist in developing procedures, not requiring an assertion by a responsible party and permitting general-use reports, the [AUP] service delivers enhanced value and relevance to report users.”

Next steps?

The revised AUP standard is just the first step in a larger project that aims to align the attestation standards with the needs of engaging parties and intended users. In the coming months, the ASB plans to tackle proposed changes to the standards for examination and review engagements. Stay tuned for the latest developments.