Agreed Upon Procedures（AUP）

An Agreed-Upon Procedures (AUP) engagement is a type of assurance-related service provided by accountants or auditors, where the practitioner performs specific procedures agreed with the client (and sometimes a third party) and then issues a factual report of the findings without providing an overall opinion or assurance.

(Key Characteristics)

Scope: Defined in advance, based on the needs of the engaging party.

Independence: Usually requires the practitioner to be independent.

Output: The report lists procedures performed and factual findings; it does not express an audit opinion (reasonable assurance) or a review conclusion (limited assurance).

Responsibility: The engaging party is responsible for determining whether the procedures and findings are appropriate for their purposes.

Service plan example of AUP

As the needs of a foreign parent company may vary widely, the nature, timing, and extent of the agreed-upon procedures may vary, as well. We will perform tailored procedures requested by a foreign parent company, depending on their interests.

The following table summarizes an example of Agreed upon procedures service for a foreign affiliated firm in Japan. Depending on organizational structure and human resources, a parent company can tailor what they test in regard to financial items of a affiliated firm in Japan.

	Items	Procedures　(Example)
1	Sales and Cost of Sales	Verification of the general ledger and the consistency with the final financial report
2	Sales and Cost of Sales	Confirmation of the integrity between the general ledger and the data generated by ×××’s enterprise system concerning Sales and Cost of Sales as of December 31, 20××
3	Sales and Cost of Sales	Confirmation of the integrity between the data generated by ×××’s enterprise system summary documents and the related evidences (example: invoices etc.) concerning Sales and Cost of Sales as of December 31, 20×× (the total number of samples is 25 (2-3 samples per a month))
4	Bank account	Match of bank account balances with Confirmations which Fukai received direct from Banks as of December 31, 20××
5	Loan	Collection of the long-term loan account balance from Banks with Confirmations which Fukai received direct from Banks as of December 31, 20××
6	Account receivables	Confirmation of the adequacy of the accounts receivable balance at the end of December 20××, and the existence or nonexistence of a doubtful receivable for over 6 months
7	Inventory	Reconcile the inventory count to the general ledger
8	Tax	Confirmation of payment status of tax
9	Tax	Confirmation of the integrity between the Balance Sheet and Profit and Loss Statement and the tax return on 20××
10	Tax	Provide second opinions on tax treatments

Agreed Upon Procedures (AUP) vs Audit (Assurance)

In an audit, practitioners are required to perform in accordance with the Audit Standard in order to express their opinion on financial statements. Consequently, procedures to be conducted tend to be significantly comprehensive. In contrast, Agreed Upon Procedures (AUP) can be tailored based on clients' specific needs.

（Objective）

Audit: To provide reasonable assurance that the financial statements are free of material misstatement, in accordance with a reporting framework (e.g., IFRS, US GAAP, J-GAAP).

AUP: To perform specific procedures agreed with the client (and/or third parties) and report factual findings. No opinion or assurance is provided.

（Procedures）

Audit: Auditor decides which procedures are necessary to obtain sufficient and appropriate evidence. The client cannot dictate the exact steps.

AUP: The procedures are pre-agreed. The practitioner performs only those steps—nothing more, nothing less.

（Assurance / Opinion）

Audit: Ends with an audit opinion (unmodified, qualified, adverse, or disclaimer). It expresses assurance about the overall fairness of the financial statements.

AUP: Ends with a factual findings report. No conclusion, no positive/negative assurance.