Agreed-upon procedures engagement or consulting engagement?
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Agreed-upon procedures engagement or consulting engagement?

5 years ago · 442.3 KB Download

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A common question we receive from our members relates to the difference between an agreed-upon procedures engagement and a consulting engagement. This report will cover the differences and basic requirements for both types of engagements and address common situations that typically fit into each type of engagement.

A review of recent peer review findings indicates that some firms do incur Matters for Further Consideration (MFC) from peer reviewers related to distinguishing between an agreed-upon procedures engagement and a consulting engagement, as the following example MFC indicates:

Illustrative peer review matter for further consideration:

The firm was directed and performed services on specific elements of internal control. The firm couldn't delineate if such services were AUP or consulting. As these procedures were "agreed upon" between the firm and the client; the firm should have followed the guidance as directed in AT 201. The "report" issued by the firm used specific terminology (i.e., "audit", “opinion”) that could indicate that certain services were provided, when in fact they weren't. Further, such report did not follow any guidelines prescribed by the AICPA; notwithstanding that such report specifically indicated that the services were performed in accordance with the AICPA standards. The firm’s response as to why such report and engagement letter was used for the engagement was that the firm utilized a report similar to that issued by the predecessor, as requested by the client.

This report covers the differences between the two types of engagements to help practitioners avoid findings on their next peer review like the one above.

Download the Guide to distinguishing AUP from consulting engagements

File name: CPEA-distinguishing-aup.pdf

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