Special Purpose Audit (UAE) - AUP

It is an engagement where PNPC performs a specific, precisely defined set of procedures agreed in advance with the party (or parties) commissioning the work, and reports only the factual results — with no opinion, no conclusion, and no assurance expressed. It is governed by International Standard on Related Services (ISRS) 4400 (Revised). The reader of the report draws their own conclusions from the stated facts.

A Special Purpose Audit (under ISA 800/805) still results in an opinion — reasonable assurance that a defined element or set of accounts is fairly stated against an agreed framework. An AUP engagement expresses no opinion at all; it simply reports factual findings against specifically agreed procedures. AUP is faster and cheaper because there is no professional judgement to exercise in reaching a conclusion — but it also gives the reader less than an audit opinion would.

Franchisors and licensors verifying franchisee turnover for royalty calculations, banks confirming a specific covenant ratio, joint-venture partners checking a cost-share or profit-share calculation, buyers in smaller transactions wanting a targeted check rather than full due diligence, and occasionally regulators or grant-giving bodies with a narrowly defined verification requirement.

International Standard on Related Services (ISRS) 4400 (Revised), 'Agreed-Upon Procedures Engagements', issued by the International Auditing and Assurance Standards Board (IAASB). It sets out the practitioner's responsibilities for agreeing procedures with the engaging party, performing them, and reporting factual results without expressing assurance.

Where a bank only needs one specific fact confirmed — a covenant ratio, a drawing-power calculation, a specific balance — a full audit opinion on the entire set of financial statements is disproportionate in cost and time. An AUP engagement lets the bank get exactly the confirmation it needs, faster and at lower cost, while the annual statutory audit (if required separately) continues to cover the complete financial statements.

Yes, within its defined scope — because it reports independently verified factual results against agreed procedures, it can support a royalty payment calculation, a covenant compliance certificate, or a cost allocation between JV partners as documentary evidence of what was checked and found. It does not carry the weight of an audit opinion, and it should not be presented as though it does.

A straightforward, single-procedure AUP engagement — for example, recalculating a royalty base against a clear franchise agreement formula — can often be completed within one to two weeks once procedures are agreed and evidence is provided. More complex engagements involving multiple procedures across several accounts or entities take longer.

PNPC typically drafts the procedures based on the underlying agreement or formula (the franchise clause, the covenant wording, the JV cost-share mechanism), then circulates the draft for the engaging party — and any other relying party — to review and formally agree before fieldwork begins. Precision in the wording is the single most important factor in the engagement's usefulness.

PNPC reports it as a specific, factual exception rather than resolving it through professional judgement — for example, if a recalculation cannot be performed because a required document does not exist, that is reported as a finding in its own right, and the engaging party decides how to proceed, rather than the practitioner deciding on their behalf.

Only the parties who formally agreed the procedures before fieldwork began, and who are explicitly named in the restriction on use. Under ISRS 4400 (Revised), a party who did not agree the procedures in advance is not entitled to rely on the results, even if they later see the report.

Not directly — an AUP engagement and an audit are separate engagement types requiring separate scoping and terms. However, the evidence gathered during an AUP engagement (ledgers reviewed, confirmations obtained) can often be reused efficiently if the client subsequently commissions a broader audit or review on the same subject matter.

AUP procedures are not a Corporate Tax filing requirement, but they are sometimes used to verify specific figures — a royalty base, an intercompany cost allocation — that feed into a related party's or franchisee's taxable income calculation under Federal Decree-Law No. 47 of 2022 (9% on taxable income above AED 375,000, effective for financial years starting on or after 1 June 2023). Where the underlying figures matter for tax positions, we flag this to the client's tax advisor.

Where the procedure involves verifying reported turnover, we routinely cross-check the figure against the entity's VAT return filings on EmaraTax as one of the agreed procedures, since a material mismatch between reported turnover and VAT-declared revenue is a fact worth surfacing to a franchisor or lender relying on the figure.

AUP engagements are typically priced lower than a comparable special purpose audit or statutory audit, because the procedures are narrower and the practitioner is not exercising the broader professional judgement needed to reach an opinion. PNPC agrees a fixed fee once the specific procedures are finalised, since the fee depends directly on how many procedures are agreed and how much evidence-tracing each one requires.

Yes — this is one of the most common recurring AUP structures we run. Once the procedures are agreed for the first cycle, subsequent cycles reuse the same wording (updated only if the underlying franchise agreement or formula changes), which meaningfully speeds up each subsequent engagement.

Vague or loosely worded procedures that leave room for interpretation — because an AUP report's entire value rests on the procedures being mechanical and unambiguous, a poorly worded procedure produces a report that different readers interpret differently, defeating the purpose of the engagement.

Independence requirements for AUP engagements under ISRS 4400 are less stringent than for an audit, since no assurance is being expressed — but PNPC still assesses and discloses any relevant relationship with the entity or the engaging parties, because a perceived conflict can undermine the credibility of even a purely factual report.

Yes — this is a common and well-suited use of AUP: the JV agreement's profit-share or cost-allocation formula is translated into specific, mechanical procedures (recalculate the allocation per clause X, trace specified costs to invoices, confirm intercompany transfers against bank statements), and PNPC reports the factual results to both JV partners.

We pause and formally document the change as an amendment to the agreed procedures, obtaining renewed sign-off from every relying party before continuing — an AUP engagement's report is only as reliable as the discipline around what was actually agreed, so mid-engagement changes are never applied informally.

An AUP factual findings report can be submitted as documentary evidence of what was checked and found, provided it was properly scoped and evidenced — but because it expresses no assurance conclusion, its evidentiary weight in a dispute differs from an audit opinion, and counsel should be consulted on whether additional expert evidence is needed for litigation purposes.

Yes — PNPC operates from Chennai, Bangalore, Hyderabad, and Dubai, and regularly runs AUP engagements where the engaging party (a franchisor, licensor, or JV partner) is based in India and the entity being checked operates in the UAE, coordinating a single procedures list and report that both sides recognise.

A factual findings report listing each agreed procedure and its specific result, the mandatory statement that no assurance is expressed, and the restriction on use naming every party entitled to rely on the report — plus the underlying working papers retained per professional record-retention standards.

Yes — this is one of the recurring uses of AUP in the UAE, particularly for retail, F&B, and serviced-office tenants whose lease includes a percentage-rent or turnover-linked service charge clause. PNPC recalculates the tenant's reported turnover against the specific lease formula and confirms the result, without expressing any broader opinion on the tenant's overall financial position.

A Sales/Turnover Certificate is typically a short-form certification of a stated turnover figure for a specific purpose (a tender requirement, a bank submission, a regulatory filing), often based on a defined but lighter-touch review of the underlying records. An AUP engagement is procedure-specific and can be scoped more narrowly or more deeply depending on what the recipient — a franchisor, landlord, or lender — actually needs recalculated and confirmed, and it always carries the explicit ISRS 4400 no-assurance statement and restriction on use, which a turnover certificate may not.

Yes, provided each relying party's specific procedures are separately identified, worded, and agreed within the same engagement letter — for example, a JV cost-share AUP might include one set of procedures each partner specifically wants checked. PNPC keeps each party's agreed procedures distinct in the report so it is clear which findings each relying party formally agreed to and is entitled to rely on.

An AUP report is a snapshot against the specific procedures and period agreed — it is not automatically renewed. Where the underlying need is recurring (an annual royalty verification, a quarterly covenant check), a new AUP cycle is run each time, though PNPC structures these as a standing engagement so procedures are reused rather than re-negotiated from scratch each time.

PNPC reports this as a specific factual finding — for example, that a required document could not be obtained or a specific procedure could not be performed because the entity did not provide access — rather than silently omitting the procedure from the report. The engaging party then decides how to proceed, including whether to escalate with the entity directly.

Yes — where the SPA or term sheet specifies a precise metric (net working capital at completion, a minimum cash balance, confirmation that no undisclosed liability above an agreed threshold exists), AUP procedures can be worded to mechanically recalculate and confirm that metric, giving both buyer and seller an independently verified figure to release funds against or calculate an earn-out payment.

Beyond ISRS 4400 (Revised) itself, PNPC applies the IESBA Code of Ethics for Professional Accountants for matters of integrity, objectivity, and professional competence, and its own internal quality control procedures for engagement acceptance, procedures drafting review, and second-partner sign-off before any AUP report is issued.

There is no fixed minimum — the right test is whether the cost of scoping and running even a narrow, single-procedure AUP engagement is proportionate to the value or risk of the underlying decision (a royalty payment, a covenant confirmation, a cost-share reconciliation). For very small, low-stakes figures, the parties sometimes agree to rely on management's own confirmation instead, without commissioning independent procedures.

Yes — where the underlying question requires it, for example confirming a covenant ratio across the last two reporting periods for trend purposes, or checking a JV cost allocation across a multi-year dispute period, the agreed procedures are simply scoped to cover each relevant period, with results reported separately by period so no year's findings are blended with another's.

Not as a general rule — PNPC can perform an AUP engagement independently of who holds the client's statutory audit appointment, since AUP is a separate engagement type under a different standard. Where PNPC is also the client's statutory auditor, we assess whether performing both engagements creates any independence or self-review concern for the specific procedures involved, and disclose this to all relying parties if relevant.

Some UAE banks use the term 'accountant's report' loosely to mean various things — sometimes a short-form certificate, sometimes a set of agreed-upon procedures, sometimes a limited review. PNPC always confirms with the bank exactly what standard and format they expect before drafting anything, because assuming an AUP engagement is wanted when the bank actually expects a review-style conclusion (or vice versa) produces a deliverable the bank will reject.

Yes — where a relying party specifically requires an Arabic version (for example, for submission to a UAE government body), PNPC can issue the report bilingually or provide a certified Arabic translation, provided this is agreed at the scoping stage since it affects timeline and cost.

Yes, where the specific agreed procedure calls for it — for example, confirming stock quantities at a specific date as part of an insurance-claim AUP, or observing a specific process as one of several agreed procedures. The site visit itself is treated as one mechanical procedure among the agreed set, with the observed result reported factually, exactly like every other procedure.

Generally no in the classic AUP structure, because the entity being checked typically needs to know exactly what will be tested in order to provide the required access and records — and ISRS 4400 contemplates the procedures being performed with the cooperation of the party holding the underlying information. Where confidentiality from the entity is genuinely required, that points toward a different engagement type, such as an investigative or forensic engagement, rather than AUP.

Sampling can be part of an agreed procedure, provided the sampling basis itself is precisely specified in advance — for example, 'select and trace every invoice above AED X, plus a sample of 20 invoices below that threshold selected on a specified basis'. What ISRS 4400 requires is precision in what was tested and how, not that every procedure must cover 100% of a population.

Yes, in principle — ISRS 4400 is not limited to financial subject matter, so procedures can be worded to confirm specific non-financial facts (a headcount figure, a specified operational metric, a defined sustainability data point) where the engaging party needs that fact independently verified. In practice, most UAE AUP demand remains financial (turnover, covenant ratios, cost allocations), but the standard itself does not restrict the subject matter.

It can — a new owner or management team may not be bound by procedures agreed by their predecessor, and the underlying agreement or formula being tested (a franchise clause, a covenant, a JV formula) may itself change on a change of control. PNPC treats a change of ownership or management as a trigger to re-confirm the agreed procedures with the new relying parties before continuing a standing engagement, rather than assuming continuity automatically.

This depends entirely on what GDRFA/ICP or the relevant visa category specifically requires as evidence — some financial substantiation requirements call for audited financial statements, a net worth certificate, or a bank statement rather than an AUP factual findings report, since AUP's restriction on use and lack of an assurance opinion may not match what the visa process is designed to accept. PNPC confirms the specific documentary requirement with the client before assuming AUP is the right format.

PNPC can perform the underlying verification work once and issue two separate, correctly formatted deliverables — an ISRS 4400 factual findings report for the party that specifically requires AUP, and a Sales/Turnover Certificate for a different recipient with a different documentary requirement — provided each output correctly reflects its own standard and is not blended into a single hybrid document that misrepresents either format.

Both, but independently — each additional agreed procedure typically adds its own evidence-tracing work, and each additional period covered (a two-year covenant trend versus a single-year check) effectively multiplies the fieldwork for whichever procedures apply across those periods. We price the two dimensions separately rather than assuming a flat per-engagement fee.

Not materially for the core procedures, since AUP evidence is drawn from the entity's own ledgers, bank records, and agreements regardless of licence type. The main variable is how quickly the underlying documents (the franchise agreement, the facility letter, board records) can be produced, which can be slower for an offshore holding vehicle relying on a registered agent for document custody.

The concept is closely related — both involve an accountant reporting on specific, agreed facts rather than a full opinion — but the governing standard and terminology differ: UAE AUP work follows ISRS 4400 (Revised) issued by the IAASB, while a comparable Indian engagement typically follows the Institute of Chartered Accountants of India's own Standards on Related Services. For an India-UAE group needing consistent reporting on both sides, PNPC aligns the substance of the procedures even though the two reports cite different governing standards.

PNPC formally closes out the standing engagement rather than letting it lapse silently, and discusses with the client whether a final AUP cycle is needed to true-up figures for the terminated relationship's last period — this is particularly relevant where a royalty, cost-share, or exit-payment calculation depends on an accurately confirmed final-period figure.

This is workable but riskier, since ISRS 4400 procedures need to be tied to a defined, agreed basis, and an informal or undocumented understanding gives less precision to word the procedures against. We recommend formalising the underlying arrangement in writing first wherever possible, since a well-drafted procedure cannot compensate for an ambiguous or undocumented underlying formula.

Yes — where a mainland company's arrangement with a local service agent or (historically) a local sponsor includes a fee formula tied to turnover, profit, or a specific metric, this can be scoped as an AUP engagement recalculating the agreed compensation against the underlying agreement, in the same way as a franchise royalty or JV cost-share check.

This depends entirely on what the insurer and the client's broker have agreed the procedures should cover — some engagements are scoped narrowly to confirm specific factual inputs (verified expenditure, stock quantities at the loss date), while others extend to mechanically recalculating the business-interruption formula itself, provided that formula is precisely defined in the policy wording or the loss adjuster's methodology.

We confirm the JV agreement's own currency and translation basis for the cost-share calculation, and word the procedures to recalculate using that specific basis (a fixed rate, a period-average rate, or actual transaction-date rates), rather than applying a rate convention of our own choosing.

PNPC investigates the specific procedure affected, and if an error is confirmed, issues a corrected report together with a covering note explicitly superseding the earlier version, addressed to every party who received the original — the same controlled reissue discipline applied to any other assurance-adjacent deliverable.

It is restricted to the named relying parties by design, and PNPC advises against onward distribution beyond them — sharing it with a competitor, an unrelated counterparty, or the public would extend reliance beyond what was agreed and could expose the client to a claim that the figures were relied upon in a context never intended.

PNPC's UAE-licensed audit registration (with the Ministry of Economy and the relevant emirate authority) covers assurance and related-services engagements generally, including AUP work under ISRS 4400 — there is no separate, additional UAE licence specific to AUP engagements as a distinct category.

A management letter accompanying a statutory audit reports control weaknesses or observations the auditor noticed during the annual audit as a by-product of that broader opinion-forming work. An AUP report is a standalone engagement built entirely around specific, pre-agreed procedures with no broader audit opinion attached — the two serve different purposes and are not interchangeable, even though both can surface similar underlying facts.

This depends entirely on what the DFSA or FSRA rulebook specifically requires for the submission in question — some regulatory filings call for audited or reviewed figures rather than a restricted, no-assurance AUP report, so PNPC confirms the exact regulatory requirement with the client (and, where needed, the client's DIFC/ADGM legal counsel) before assuming AUP is the correct format.

Typically one report presenting both figures with the translation basis disclosed, provided all relying parties are comfortable with a single bilingual-currency document — where relying parties have materially different format requirements, we issue separate reports rather than forcing an awkward combined format that satisfies neither fully.

This depends on what RERA and the escrow account rules specifically require for the developer's project — escrow reconciliation for RERA-regulated developments in Dubai typically calls for defined audit or certification procedures under the applicable escrow law and RERA circulars, and PNPC confirms the exact requirement before determining whether an AUP-style engagement or a different assurance format is the compliant route.

We flag the ambiguity to the engaging party and, where possible, the relying parties, before drafting the procedure, since ISRS 4400 requires precision that a badly worded contractual clause cannot supply on its own — sometimes this means the parties need to agree an interpretation of the clause in writing before PNPC can word a workable procedure around it.

No — an AUP report is limited strictly to the procedures performed and their factual results, with no recommendations, opinions, or improvement suggestions, since adding those would introduce exactly the kind of professional judgement ISRS 4400 is designed to exclude from this engagement type.

PNPC carries professional indemnity insurance covering its assurance and related-services engagements, including AUP work, and the engagement letter's restriction on use is itself a risk-management mechanism limiting reliance to the specifically named parties who agreed the procedures — which is precisely why identifying every relying party correctly at scoping matters as much for risk management as for the report's usefulness.