Do You Need Agreed Upon Procedures (AUP)? A Practical Starting Point
An Agreed-Upon Procedures (AUP) engagement is not an audit and does not give an opinion — it is a factual-findings report built entirely around the specific procedures you and PNPC agree in advance. When a bank wants stock and debtor verification before renewing a cash-credit limit, when a franchisor wants royalty compliance confirmed, when a joint-venture partner wants a specific covenant tested, or when a regulator or investor wants a narrow, defined check performed and reported factually — AUP is the right instrument. At PNPC Global, we have performed agreed-upon procedures engagements for banks, franchisors, joint-venture partners, and regulators across India and the UAE since 1986.
What This Actually Covers
An Agreed-Upon Procedures (AUP) engagement is governed in India by the Standard on Related Services (SRS) 4400 (Revised), issued by the Institute of Chartered Accountants of India (ICAI), which is aligned with the International Standard on Related Services ISRS 4400 (Revised) issued by the IAASB. Under this framework, a Chartered Accountant is engaged to perform specific procedures that have been agreed between the practitioner, the engaging party, and (where relevant) other intended users — and to report the factual findings from those procedures. Critically, the practitioner expresses no assurance conclusion and no opinion.
For the full scope, current process and what PNPC includes, see the dedicated Agreed Upon Procedures (AUP) service page.
When You'd Need This
- A bank or NBFC requires independent verification of stock, book debts, or specific current-asset balances before renewing, enhancing, or reviewing a cash-credit or working-capital facility
- A franchisor needs periodic, independent verification that a franchisee's reported sales, royalty computation, or specific operational metrics match underlying records — without commissioning a full audit of the franchisee
- A joint-venture partner, collaboration partner, or licensor wants specific contractual covenants (revenue share, minimum spend, exclusivity compliance) independently verified against records
- A lender, investor, or acquirer in a transaction wants specific, narrowly defined figures or representations verified quickly, ahead of or alongside a broader due-diligence exercise
When It Isn't the Right Fit
- You need an opinion on whether financial statements as a whole give a true and fair view — that requires a statutory audit under SA 700, not AUP, which gives no opinion at all
- You need negative assurance on financial statements for external circulation (for example, to a wide group of lenders or the general public) — a review under SRE 2400 or an audit is the appropriate engagement, not a restricted-use AUP report
- You suspect fraud, misappropriation, or deliberate manipulation and need a forensic investigation with root-cause analysis, quantification of loss, and evidence suitable for legal or disciplinary proceedings — a forensic audit engagement is designed for that; AUP procedures are agreed in advance and are not investigative in nature
Questions We're Actually Asked
What exactly is an Agreed-Upon Procedures (AUP) engagement?
It is an engagement under Standard on Related Services (SRS) 4400 (Revised) where a Chartered Accountant performs specific procedures that have been agreed in advance with the engaging party, and reports the factual findings from those procedures. The practitioner does not express an opinion or any assurance conclusion. The reader of the report — the bank, franchisor, joint-venture partner, or other intended user — draws their own conclusions from the factual findings reported.
How is AUP different from a statutory audit?
A statutory audit results in an opinion — typically whether the financial statements give a true and fair view — based on the auditor's own risk assessment and judgment about what to test, governed by the Standards on Auditing. An AUP engagement results in no opinion at all — only factual findings against procedures that were specifically agreed in advance, governed by SRS 4400. The scope of an audit is determined by the auditor; the scope of an AUP engagement is determined jointly by the practitioner and the engaging party.
Can an AUP report be shared with anyone other than the party who requested it?
No, not as a matter of good practice and standard drafting. SRS 4400 requires the report to state clearly that it is intended solely for the parties who agreed to the procedures, because a party unfamiliar with the specific scope could misinterpret factual findings as broader assurance than was actually provided. If a wider circulation is genuinely needed, that requirement should be identified during scoping — before the engagement letter is signed — so the intended users are properly defined and consulted on the procedures from the start.
Where PNPC Fits In
Speak directly with a PNPC Chartered Accountant about your bank's, franchisor's, or joint-venture partner's specific requirement. Not a template checklist. Not a generic empanelled-CA form response. A practising CA who will scope the procedures precisely, execute them with rigour, and give you a report that actually answers the question that was asked.
PNPC Global has advised Chennai, Bangalore and Hyderabad businesses since 1986. Explore the full Audit & Assurance practice for related services, or go straight to the Agreed Upon Procedures (AUP) page for specifics.
Specific rates, fees, thresholds and deadlines are set by the relevant authority and change over time — this article deliberately does not quote figures that could go stale. Confirm current numbers directly with PNPC or the official source before you act.