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ACCA Strategic Professional · Advanced Audit and Assurance (International) · Reporting on other assignments

Marlow LLP is asked by a lender to perform agreed-upon procedures on Tindall plc's covenant calculations. The lender asks Marlow to describe the procedures as 'such procedures as the practitioner considers necessary'. Which response is most consistent with ISRS 4400 (Revised)?

Marlow should decline the vague wording. Under ISRS 4400 (Revised), procedures must be agreed with the engaging party and described clearly and specifically, not left to the practitioner's discretion. Because the engagement gives no assurance, users rely on understanding exactly what was done.

  1. AAccept, because the practitioner's professional judgement determines the scope of an AUP engagement
  2. BAccept, provided the report includes a negative assurance statement on the covenant calculations
  3. CDecline this wording, because the procedures must be agreed and described in terms that are clear, specific and not vagueCorrect
  4. DAccept, provided the practitioner later narrows the procedures without telling the lender

Explanation

ISRS 4400 (Revised) requires the procedures to be agreed with the engaging party and described in clear, specific terms; vague wording such as 'as the practitioner considers necessary' is not acceptable. Scope is not left to the practitioner's judgement as in an audit, and no assurance is given, so negative assurance is inappropriate. Silently narrowing procedures would breach the agreed terms.

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