Agreed procedures and related services
A report reflecting the actual findings
Agreed procedures involve the preparation of a fact-finding report performed by a professional accountant. Transactions involving agreed procedures can be varied and it depends on the customer’s relevant needs.
Agreed procedures and related services are mainly relevant for medium and small companies, which are exempt from audit obligations.
A wide range of stakeholders
Regulators, financiers and creditors use agreed-upon procedures for a variety of reasons.
Agreed procedures do not constitute an audit or other assurance service and do not constitute an expression of opinion. It can take place at any time of the year and the timing of the proceedings is not governed by persons other than the parties to the settlement agreement. The essence of conducting agreed-upon procedures is for the auditor to perform audit-type procedures that are pre-agreed between the client, the audit firm, and the relevant interested third party.
At this time the auditor will issue a report which will reflect only the findings he has found. At this time the auditor does not express an opinion, unlike the audit transaction and in such a case the report prepared by him is not of a persuasive nature and the client himself draws a conclusion based on the factual findings presented by the auditor.
Financial report prepared as a result of agreed procedures
These types of reports are intended only for those parties who have agreed to it and not for any other party, as there is a risk of misinterpretation of the results reflected in the report. The tests to be performed during the agreed procedures must be clear and transparent to the parties to the agreement. Among them should be a detailed discussion of the planned procedures in order to maximize the satisfaction of the client’s interest.
The advantage of agreed-upon procedures is that the professional conducting them is an objective and qualified practitioner, although it is also necessary for the client to have relevant knowledge of the business in order to be able to determine the content and scope of the work to be performed. He should also be able to analyze and interpret the results of the work done by a professional.
Effectiveness of agreed procedures
Agreed procedures are an effective tool when the customer wants to receive certain types of support for information provided by him or her or the person responsible for the information or for the accuracy and reasonableness of future plans. It is not advisable to conduct an audit in such a case, as it is usually not possible to conduct a volume of work that would allow the practitioner to express a reasonable opinion on future plans. Accordingly, in such a case, the agreed procedures on how the type of service will be most appropriate for the type of service that will be performed by verifying the assumptions on the basis of which future plans have been developed.
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