A bank wants to know whether a borrower's quarterly covenant calculation is correct before releasing the next draw of a $25 million revolver. The bank does not need an audit. It needs a CPA to recompute three covenant ratios and report exactly what was found, with no opinion attached. That is an agreed-upon procedures engagement, and on the exam, the trap is almost always a candidate writing "in our opinion" into the report.
HIGH-FREQUENCY: AUP engagements live under the attestation standards, not the auditing standards. The governing standard is SSAE 19, codified in AT-C 215. AU-C section numbers are auditing standards and do not apply here.
The practitioner performs procedures specified by the engaging party and reports the findings without expressing an opinion or conclusion. The output is a list of procedures performed and a list of findings, presented in factual terms.
KEY: AUP is procedure-and-finding reporting. There is no opinion, no conclusion, no assurance. If the report says anything that sounds like an opinion, it is wrong.
Common mistakes
- Writing "in our opinion" into an AUP report. The single most common error. AUP reports list procedures and findings; the engaging party draws conclusions. Any choice describing the practitioner as "expressing an opinion on covenant compliance" is wrong.
- Confusing AUP with a review. Reviews provide limited assurance under AT-C 210; AUP provides no assurance under AT-C 215. A review says "we are not aware of any material modifications"; an AUP report lists procedures and findings.
- Letting the practitioner decide the procedures. The engaging party specifies the procedures. The practitioner agrees they are performable and not in prohibited language, but does not unilaterally design or substitute. If the engaging party will not specify, the engagement is not AUP.
Bottom line
- AUP engagements are governed by SSAE 19, codified in AT-C 215, under the attestation standards.
- The practitioner performs specific procedures agreed to by the engaging party and reports findings, with no opinion, no conclusion, and no assurance.
- Procedures must be specific enough to be performed consistently; words like "evaluate," "assess," or "in our opinion" are prohibited.
- The engaging party is responsible for the sufficiency of the procedures; the practitioner does not opine on whether they are appropriate.
Exam shortcut
When the question describes a third party that needs specific procedures performed and factual findings reported, with no opinion, the engagement is AUP under AT-C 215. Cues: a bank wanting covenant ratios, a licensor wanting royalty recomputation, a buyer wanting due-diligence procedures.
The full lesson (about 2,050 words, 14 min read) adds 1 worked example, all 5 common mistakes, a self-check, free in the app.
Learning objectives
- IV.B2
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