What is provided in a report based on an agreed upon procedures engagement?
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Agreed-upon procedures provide practitioners with an important opportunity to use their skills and training to help clients with engagements that differ from both audits and consulting engagements. Show
A carefully constructed agreed-upon procedures engagement can enable a client to use a practitioner's expertise to gain comfort, for example, on certain types of transactions such as travel and credit card transactions; or tax credits available to condominium owners. Practitioners may benefit from increased flexibility to perform agreed-upon procedures engagements under a standard issued by the AICPA Auditing Standards Board (ASB) in December 2019. Statement on Standards for Attestation Engagements (SSAE) No. 19, Agreed-Upon Procedures Engagements, is effective for agreed-upon procedures reports dated on or after July 15, 2021, with early implementation permitted. SSAE No. 19 supersedes AT-C Section 215 of the same title in SSAE No. 18. SSAE No. 19 also amends AT-C Section 105 of SSAE No. 18, Concepts Common to All Attestation Engagements. SSAE No. 19 provides flexibility to practitioners with changes that are summarized in the chart, "Comparison of SSAE No. 18 and SSAE No. 19." The new standard:
SSAE No. 19 also requires new disclosures in the agreed-upon procedures reports that address the risk that some users could misunderstand the reports' content. The new standard also more closely aligns these standards with the International Auditing and Assurance Standards Board's standards for agreed-upon procedures engagements. The new standard may provide practitioners with new engagement opportunities by:
Comparison of SSAE No. 18 and SSAE No. 19 3 TYPES OF ATTESTATION ENGAGEMENTSAT-C Section 105 defines an attestation engagement as an examination, review, or agreed-uponprocedures engagement performed under attestation standards related to subject matter or an assertion that is another party's responsibility. The three types of attestation engagements are:
All agreed-upon procedures engagements have an engaging party (who hires the practitioner), a responsible party (who is responsible for the subject matter), the practitioner, and the intended users. Often the engaging and the responsible party are the same; however, in other engagements, the engaging party and the responsible party may differ (see the sidebar "Example of Application of an Agreed-Upon Procedures Engagement"). CRITERIA FOR ACCEPTING SSAE ENGAGEMENTSAT-C Section 105 requires a practitioner's independence when performing attestation engagements unless a law or regulation requires the practitioner to accept the engagement and report on the subject matter, e.g., compliance with SEC Due Diligence Form 15E, Certification of Provider of Third-Party Due Diligence Services for Asset-Backed Securities. This is not changed by SSAE No. 19. Also, the AICPA Code of Professional Conduct's "Agreed-Upon Procedure Engagements Performed in Accordance With SSAEs" interpretation (ET §1.297.020) modifies the independence requirements for agreed-upon procedures engagements. Among other things, this interpretation only requires the practitioner to be independent from the responsible party or parties when agreeing to issue reports in accordance with SSAEs. As SSAE No. 19 explicitly permits practitioners to develop, or assist in developing, the procedures for an agreed-upon procedures engagement, the AICPA Professional Ethics Division discussed perceived independence issues raised by the addition of this explicit permission. The ethics division does not believe that this perceived independence issue raises any actual threats to independence. Because SSAE No. 19 requires the engaging party to agree to the procedures and acknowledge that the procedures are appropriate for the intended purpose of the engagement, this agreement and acknowledgment mitigate any perceived self-review and management participation threats, as the practitioner would not be the only one assessing the appropriateness of the procedures. The practitioner should also determine that the following four conditions exist in order to accept such engagements:
Next, the practitioner and engaging party should agree in writing upon the engagement's terms (normally in an engagement letter), including that the engaging party will provide the practitioner, prior to the completion of the engagement, with a written agreement and acknowledgment that the procedures performed are appropriate for the intended purpose of the engagement as well as a representation letter upon completing the engagement. The acknowledgment regarding the appropriateness of the procedures may be included in the representation letter. The practitioner also assumes the risk that misapplying the agreed-upon procedures may cause inappropriate reported findings and assumes the risk of omitted or misreported findings. As in all engagements, adequate planning and supervision and applying due professional care in performing the procedures, accumulating the findings, and preparing the practitioner's report can lower the practitioner's risks. REQUIREMENTS OF SSAE NO. 19The agreed-upon procedures practitioner's report should, in part:
The practitioner's documentation for the agreed-upon procedures engagement is required to include the following items:
FLEXIBILITY IS THE KEYThe flexibility associated with SSAE No. 19 could provide practitioners with new opportunities to use their skills to serve the public. Practitioners' expertise in rapidly evolving subject matters is highly valued in today's increasingly complex business environment. By permitting general reports, enabling practitioners to have a role in developing procedures and eliminating the requirement for an assertion by a responsible party, the new standard enhances practitioners' ability to serve the public and users of agreed-upon procedures reports. Example of application of an agreed-upon procedures engagement A landlord engages a practitioner to perform agreed-upon procedures on a schedule of a commercial rental property's common-area maintenance expenses to submit to all related tenants. Prior to the issuance of SSAE No. 19, Agreed-Upon Procedures Engagements, if the tenants were intended to be permitted to use the report, the practitioner was required to get tenants to agree in advance to the procedures' sufficiency. Under SSAE No. 19, the practitioner need not get any tenants to agree to the sufficiency or appropriateness of the procedures performed. If the engaging party determines it is appropriate to obtain the agreement of the tenants to the appropriateness of the procedures, then the engaging party would do that as part of providing its acknowledgment to the practitioner. The practitioner could also issue a general-use report. Example of SSAE No. 19's agreed-upon procedures report Independent Accountant's Report [Appropriate addressee] We have performed the procedures enumerated below on the accompanying Statement of Investment Performance Statistics of XYZ Fund for the year ended December 31, 20X8. XYZ Fund is responsible for the Statement of Performance Statistics. XYZ Fund has agreed to and acknowledged that the procedures performed are appropriate to meet the intended purpose of assisting users in understanding the Statement of Investment Performance Statistics of XYZ Fund for the year ended December 31, 20X8. This report may not be suitable for any other purpose. The procedures performed may not address all of the items of interest to a user of this report and may not meet the needs of all users of this report, and, as such, users are responsible for determining whether the procedures performed are appropriate for their purposes. The procedures and the associated findings are as follows: [Insert procedures and findings.] We were engaged by XYZ Fund to perform this agreed-upon procedures engagement and conducted our engagement in accordance with attestation standards established by the AICPA. We were not engaged and did not conduct an examination or review engagement, the objective of which would be the expression of an opinion or conclusion, respectively, on the accompanying Statement of Investment Performance Statistics of XYZ Fund for the year ended on December 31, 20X8. Accordingly, we do not express such an opinion or conclusion. Had we performed additional procedures, other matters might have come to our attention that would have been reported to you. We are required to be independent of XYZ Fund and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements related to our agreed-upon procedures engagement. [Additional paragraph(s) may be added to describe other matters.] [Signature of the practitioner's firm] [City and state where the practitioner's report is issued] [Date of the practitioner's report] About the authors Alan Reinstein, CPA, CGMA, DBA, is the George R. Husband Endowed Professor of Accounting at the Mike Ilitch School of Business at Wayne State University in Detroit; Cathleen L. Miller, CPA, Ph.D., is an associate professor of accountancy at the University of Michigan—Flint; and John Fleming, CPA, MBA, is a discussion leader and consultant at Kaplan Financial Education in Philadelphia. The authors would like to acknowledge the input of Abe Akresh, CPA, consultant; David Duprey, CPA, retired CFO of Comerica; and David Sinason, CPA, professor emeritus, Northern Illinois University. To comment on this article or to suggest an idea for another article, contact Ken Tysiac, the JofA's editorial director, at [email protected] or 919-402-2112. AICPA resources Article
Center for Plain English Accounting The Center for Plain English Accounting (CPEA) is the AICPA's national A&A resource center and assists members with accounting, auditing, attest, review, and compilation needs by sharing technical advice and guidance in a straightforward manner. For more information on the benefits of membership, visit aicpa.org/cpea. What are the contents of the report on an agreedA statement that an agreed-upon procedures engagement involves the practitioner performing specific procedures that the engaging party has agreed to and acknowledged to be appropriate for the intended purpose of the engagement and reporting on findings based on the procedures performed.
What is an agreed.03 An agreed-upon procedures engagement is one in which a practitioner. is engaged by a client to issue a report of findings based on specific procedures. performed on subject matter.
What is provided in a report based on an agreedAn agreed-upon procedures report expresses assurance in the form of procedures and findings with respect to the procedures performed.
Which of the following should a practitioner include in an agreedA practitioner's report on agreed-upon procedures should contain which of the following statements? The procedures performed were those agreed to by the specified parties identified in the report.
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