Advanced Auditing, Assurance and Professional Ethics · Related Services

SRS 4400 Agreed-Upon Procedures Engagements

Updated 5 October 2026 · Fact-checked

An agreed-upon procedures (AUP) engagement under SRS 4400 is one where you perform procedures that you and the engaging party have agreed, then report the factual findings. You give no assurance and no opinion. Users draw their own conclusions. To answer, state the agreed procedures, the findings, and any restriction on use that is appropriate.

Understand SRS 4400 Agreed-Upon Procedures Engagements

In an audit or review, you form a conclusion and give assurance. In an agreed-upon procedures engagement you do not. You carry out specific procedures that the engaging party has asked for and that you have agreed to perform. You then report what you found, as facts.

The users of the report decide whether the procedures are adequate for their purpose. They draw their own conclusions from your findings. This is why an AUP report has no opinion, no conclusion and no negative assurance. It is a related service, not an assurance engagement.

Because the procedures are tailored, the engagement depends on a clear understanding. You and the engaging party must agree the terms of engagement in writing: the purpose, the procedures, the form of the report and any restriction on its use or distribution. The procedures must be described in precise terms. Vague words such as "obtain a general understanding", "check" or "read" without saying what is done are not acceptable, because they allow different readings of the findings. The procedures must also be such that you can report findings without exercising judgment. If they need judgment, the engagement is not an AUP.

You must still be professional. You comply with the relevant ethical requirements and apply quality control. Independence is not required for an AUP engagement, but you must be transparent about it. The engagement terms and the report must include a statement on whether you are independent or, if you are not, a description of the lack of independence. The report should also refer to SRS 4400 and describe the engagement, so that users know what was done and under which standard. Findings must be factual and objectively verifiable, so avoid words that suggest judgment, such as "satisfactory" or "reasonable".

The report is meant for the parties who agreed the procedures. You may restrict its use or distribution where appropriate, for example when others could misread procedures designed for a specific purpose. This is a matter of judgment and circumstances. The report is not required to be restricted, and it may be made available to other parties.

Key rules to remember

Nature of the engagement: AUP = agreed procedures performed + factual findings reported; no assurance, no opinion; Users draw their own conclusions from the findings.
Terms of engagement: Written terms: purpose, procedures, nature of report, any restriction on use or distribution; Agree these before starting. Procedures must be clear, not vague.
Independence: Independence not required; terms and report must state whether you are independent or describe the lack of independence; If you are not independent, you describe that lack of independence. Ethical requirements and quality control still apply.
Findings: Report factual findings only; avoid terms of judgment or assurance; Words like "fairly stated" or "satisfactory" do not belong in the findings.
Distribution: Restriction on use or distribution: may be applied where appropriate; not mandatory; Restrict where others could misunderstand the purpose of the procedures. Otherwise the report may be made available to other parties.

How to solve SRS 4400 Agreed-Upon Procedures Engagements questions

Use this method for any question on an AUP engagement, whether it asks for a definition, a comparison, a report or a case analysis.

1Identify the engagement. Confirm it is an AUP: specific procedures agreed, factual findings, no assurance.
2Check the terms of engagement. Look for a written agreement on purpose, procedures, report form and any use restrictions.
3Test the procedures. Are they clear and objective? Reject vague wording or any that need judgment.
4Check ethics and quality. Note the ethical requirements. Independence is not required, but the terms and the report must state whether you are independent or describe the lack of independence.
5Perform the procedures and record what you found as facts, including exceptions, without interpreting them.
6Draft the report: title, addressee, reference to SRS 4400 and a description of the engagement, procedures performed, factual findings, independence statement (or description of lack of independence), statement of no assurance, restriction on use or distribution where appropriate, date, signature.
7Conclude in the format provision, facts, conclusion. State why the report gives no opinion, who the report is for and whether its use is restricted.

Quickest way: The five-point AUP checklist

When to use it: Use it when time is short, for a short note or an MCQ on whether something fits an AUP engagement.

Scope: are the procedures agreed with the engaging party?
Output: are the results factual findings only?
Assurance: is there no opinion and no conclusion?
Users: do they form their own conclusions?
Restriction: where appropriate, is use or distribution limited? This is a judgment, not a compulsory step.

Common mistakes in SRS 4400 Agreed-Upon Procedures Engagements

Giving an opinion or negative assurance in the AUP report
Students carry over habits from audit and review reports.
Fix: Report only factual findings and state clearly that no assurance is given.
Saying independence is mandatory in an AUP engagement, or that the report need not mention it
Audit and review engagements require independence, so students assume AUP does too. Others learn that it is not required and forget the disclosure.
Fix: Independence is not required, but the terms and the report must include a statement on whether you are independent or, if not, a description of the lack of independence. Ethical requirements still apply.
Using vague procedures such as "check the records"
Students describe the work loosely, as in audit programmes.
Fix: Describe each procedure precisely so that any practitioner would perform it the same way and reach the same finding.
Saying an AUP report must always be restricted to the parties that agreed the procedures
Students know the procedures are tailored and assume restriction is a rule.
Fix: Restriction on use or distribution is a matter of judgment. Restrict where appropriate, for example where others could misunderstand the purpose of the procedures, but the report need not be restricted.
Using judgment words such as "satisfactory" or "fairly stated" in findings
Students want to sound conclusive.
Fix: State what you observed, for example amounts agreed or differences found, and leave interpretation to users.

Worked examples

Example 1

Moonlight Traders Ltd engages CA Rao to examine whether its five largest trade receivable balances at year end agree with the confirmation replies received from customers, and to report the results to its bank. The bank wants to decide on a credit limit and has agreed to these procedures. Rao is not independent of the company. Can this be done as an AUP engagement and how should he report?

Show the solution

Provision: under SRS 4400 the practitioner performs agreed procedures and reports factual findings, giving no assurance. The procedures must not require judgment.
Facts: the procedures are specific and objective (compare five balances with confirmation replies). The company engaged Rao and the bank has agreed to the procedures, so both are parties to them.
Independence: it is not required for an AUP engagement, so Rao's lack of independence does not prevent acceptance.
Report: the engagement terms and report must include a statement on whether he is independent or, if not, a description of the lack of independence. Here he is not, so the report describes that he is not independent of the company.
Content: refer to SRS 4400 and describe the engagement, then list the procedures and the factual findings, such as which balances agreed and the amount of any differences. Do not say the receivables are fairly stated. State that no assurance is given.
Agreement and use: Rao must agree the procedures with the company, as the engaging party. Because the bank will use the report, he should consider whether the bank should acknowledge the procedures; here it has already agreed. He may restrict use to the company and the bank if he thinks it appropriate, since the procedures were designed for the bank's credit decision, but a restriction is not compulsory.

Answer: Yes. Rao can accept it as an AUP engagement, agree the procedures with the company (the engaging party), consider the bank's acknowledgement of them, report factual findings with no assurance, and describe in the report that he is not independent. He may restrict use to the company and the bank where he considers it appropriate.

Example 2

Before an AUP engagement on payroll, the client asks CA Mehta to "review payroll and confirm it is satisfactory". Advise Mehta.

Show the solution

Provision: AUP procedures must be agreed in clear terms, and findings must be factual, not judgmental.
Facts: "review" and "satisfactory" are vague and need judgment. They also suggest an assurance conclusion.
Conclusion on wording: this cannot be an AUP engagement as worded.
Action: Mehta should discuss with the client and agree specific procedures, for example agreeing the salary of 25 selected employees to approved salary records and recomputing the total.
Terms: record the agreed procedures, the report form and any use restriction in a written engagement letter.
Report: state the findings factually, such as number of agreed items and exceptions, with no assurance.

Answer: Mehta should not accept the vague request. He should agree precise, objective procedures in writing and report only factual findings, without saying payroll is satisfactory.

Exam tips

For "differentiate audit and AUP", use a short list: objective, assurance, conclusion, users, independence and distribution.
In a report format answer, always include the reference to SRS 4400, the description of the engagement and the statement that no assurance is given. Add a restriction on use or distribution where the facts make it appropriate.
In case questions, first test the procedures for vagueness, then test the report wording for judgment words.
Remember the independence trap: not required, but the terms and report must state whether you are independent or describe the lack of independence.

Practice questions from Related Services

SRS 4400 Agreed-Upon Procedures Engagements: frequently asked questions

What is the difference between an audit and an AUP engagement?

An audit gives reasonable assurance and an opinion on financial statements. An AUP engagement reports only factual findings from agreed procedures and gives no assurance. Users of an AUP report draw their own conclusions.

Is independence required for an AUP engagement under SRS 4400?

No. Independence is not required, but ethical requirements still apply. The engagement terms and the report must include a statement on whether you are independent or, if you are not, a description of the lack of independence.

Can an AUP report be given to any third party?

The report is not required to be restricted, and it may be made available to other parties. You may restrict its use or distribution where appropriate, for example when others could misunderstand the purpose of the procedures and misread the findings. Whether to restrict is a matter of judgment in the circumstances.

What should an AUP report contain?

It should identify the engagement, the addressee, refer to SRS 4400 and describe the engagement. It should list the procedures performed and the factual findings. It should also include a statement on whether you are independent or a description of any lack of independence, state that no assurance is given, and carry the date and signature. Add a restriction on use or distribution where appropriate.