Agreed procedures and related services
A report of factual findings
Agreed procedures involve the preparation of a report reflecting the factual findings, which is performed by a professional accountant. The transaction reflecting the agreed procedures may be of various types and it is derived from the respective needs of the customer.
Agreed procedures and related services are mainly relevant for small and medium-sized companies exempted from the obligation to conduct audits.
A wide range of stakeholders
Regulatory bodies, funding entities and lenders use agreed procedures for a variety of reasons.
Agreed upon procedures do not constitute an audit or other assurance service and do not imply the expression of an opinion. It can be held at any time of the year, and the time of the procedure is not regulated by persons other than the parties to the regulated agreement. The essence of conducting agreed procedures is that the auditor performs audit-type procedures that are agreed in advance between the client, the audit firm and the relevant interested third party.
At this time, the auditor issues a report in which only his findings are reflected. At this time, the auditor does not express an opinion, unlike the audit transaction, and the report prepared by him at such time is not of a persuasive nature, and the client draws his own conclusion based on the factual findings presented by the auditor.
A financial report prepared as a result of agreed procedures
This type of report is intended only for the parties who have agreed to it and not for any other party, as there is a risk of misinterpretation of the results presented in the report. The tests to be performed during the agreed procedures must be clear and unambiguous to the parties to the agreement. Among them, there should be a detailed discussion of the planned procedures so that the revealed results serve the client's interest as much as possible.
The advantage of the agreed procedures lies in the fact that the professional carrying out it is an objective and qualified practitioner, however, at the same time, the customer also needs to have relevant knowledge about the business to be able to determine the content and scope of the work to be carried out. He should also be able to analyze and interpret the results of the work done by the professional.
Effectiveness of agreed procedures
Agreed procedures are an effective tool when the customer wants to receive some type of support regarding the accuracy and reasonableness of the information or future plans prepared by him or the person responsible for the relevant information. It is not appropriate to perform an audit at such a time, as it is usually not possible to conduct a volume of work at such a time that would allow the practitioner to express a reasonable assurance opinion on future plans. Accordingly, in such a case, the agreed procedures for how the type of service is the most appropriate type of service will be provided by verifying the assumptions on the basis of which future plans have been developed.
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