Agreed-upon Procedures

by Obaidullah Jan, ACA, CFA

Agreed-upon procedures engagement is a project in which the auditor, the client and/or any third party agree that the auditor will carry out certain procedures and report the details to the client and/or the third party.

In an agreed-upon procedures engagement, the auditor just reports the factual findings and the parties have to draw their own conclusions. Further, the auditor report prepared under agreed-upon procedures engagement is restricted to the parties who have agreed to the procedures i.e. it is not circulated to others potential users.


Saloil is an oil and gas company interested in granting its common stock to its employees as a reward for their loyalty. The number of shares granted to each employee is directly proportional to the years of service of each employee. The company has hired an audit firm to verify the date of joining of each employee and calculate the years of service for each employee. It is an agreed-upon procedures engagement in which the audit firm has to verify the date of joining, calculate the number of years of service and present the details to the company. The report would be available to the management of Saloil only and it cannot be openly distributed to users who did not agree to the procedures.