Page 179 - CA Final Audit Titanium Full Book. (With Cover Pages)

CA Ravi Taori
Definition: In an engagement to perform agreed-upon procedures, the auditor is engaged by the client to issue
a report of factual findings, based on specified procedures performed on specified subject matter of specified
elements, accounts or items of a financial statement.
Example: For example, an engagement to perform agreed-upon procedures may require the auditor to perform
certain procedures concerning individual items of financial data, say, accounts payable, accounts receivable,
purchases from related parties and sales and profits of a segment of an entity, or a financial statement, say, a
balance sheet or even a complete set of financial statements.
Performer of Related Services: However, a person performing related services need not necessarily be the
auditor of the entity’s financial statements.

SRS 4400 ENGAGEMENTS TO PERFORM AGREEDUPON PROCEDURES REGARDING
FINANCIAL INFORMATION

(CNO SRS 4400.020) Introduction.
SRS 4400: SRS 4400 provides guidance on the auditor’s professional responsibilities when an engagement to
perform agreed-upon procedures regarding financial information is undertaken.
Form and Content of the Report: The standard also guides on the form and content of the report that the
auditor issues in connection with such an engagement.
Objective in Accordance with SRS 4400
Objective: The objective of an agreed-upon procedures engagement is for the auditor to carry out procedures of
an audit nature to which the auditor and the entity and any appropriate third parties have agreed and to report
on factual findings.
Report of Factual Findings: As the auditor simply provides a report of the factual findings of agreed-upon
procedures, no assurance is provided by him in his report. Users of the report assess for themselves the procedures
and the findings reported by the auditor and draw their own conclusions from the work done by the auditor.
Restricted Report Usage: The report is usually restricted to those parties that have agreed to the procedures to
be performed since others, unaware of the reasons for the procedures, may misinterpret the results.
Audit Vs. Agreed-upon Procedures
Assurance: A key difference between an audit and agreed-upon procedures relates to assurance. An audit
expresses an opinion and provides assurance to users. However, in an agreed-procedures engagement, only a
report of the factual findings of agreed-upon procedures is provided. No assurance is given to users in an agreed-
upon procedures engagement. Instead, users draw their own conclusions based on factual findings stated in the
report.
Example: For example, an engagement to evaluate the validity of accounts payable may involve comparing
names of major suppliers and amounts outstanding to the trial balance, obtaining supplier statements or
confirmations, and comparing these to the amounts in the trial balance. Further, actual findings like variation
in balances reflected in trial balance and statements or confirmations are given. The actual findings are reported
as such without providing an assurance.

(CNO SRS 4400.040) General Principles of an Agreed-upon Procedures Engagement
Compliance with Code of Ethics: The auditor should comply with the Code of Ethics, issued by the Institute
of Chartered Accountants of India. The ethical principles governing the auditor’s professional responsibilities
for this type of engagement include integrity, objectivity, professional competence and due care, confidentiality,
professional conduct, and technical standards.

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