AUP Engagements Offer More Flexibility — No Written Assertion? No Problem!

In December 2019, the AICPA’s Auditing Standards Board (ASB) issued a revised attestation standard offering accountants more flexibility when performing agreed-upon procedures (AUP) engagements.

What’s an AUP Engagement?

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

1. Procedures
2. Findings

The AUP engagement subject matter may be financial or nonfinancial information. For example, it may be a statement about greenhouse gas emissions or system security and their controls’ effectiveness.

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

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.

Here’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 stating that the latter complies with underlying criteria, such as laws or regulations.

The responsible party may be the engaging party in some instances. However, for other engagements the responsible party is essentially the person or group that provides a written assertion about the subject matter to the accountant. This party may not be readily identifiable in some cases. 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.

Other Tweaks to the Attestation Guidance

The revised standard is also set to:

• 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 that intended users take responsibility for procedures sufficiency and, instead, require the engaging party to simply acknowledge the procedures appropriateness before the practitioner’s report
• 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,” said AICPA Chief Auditor Bob Dohrer 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.”

What’s Next?

In a large project that aims to align attestation standards with the needs of engaging parties and intended users, the revised AUP standard is just the first step. The ASB plans to tackle proposed change to examination standards and review engagements in the coming months. For the latest developments or questions regarding AUP engagements, contact a Weaver professional.

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