Most candidates see Agreed-upon Procedures (AUPs) on their study plan and breathe a sigh of relief, thinking they're easy points. This is a mistake. The exam doesn't just test if you can memorize the report format; it tests your judgment on when to say no to a client whose request for an AUP subtly crosses the line into asking for prohibited assurance.
Agreed-upon procedures (AUPs) are engagements where a CPA performs specific procedures on a subject matter as agreed upon by the CPA and other specified parties. The CPA then reports only the factual findings, providing no assurance, opinion, or conclusion, and restricts the report's use to those specified parties.
Key facts
- Governing Standard: AT-C Section 215, Agreed-Upon Procedures Engagements, within the AICPA's SSAEs.
- Assurance Level: None. The CPA provides no opinion or conclusion.
- Independence: Required. The CPA must be independent of the responsible party.
- Report Use: Restricted. The report is intended solely for the specified parties who agreed to the procedures.
- Responsibility for Procedures: The specified parties are responsible for the sufficiency of the procedures for their purposes.
- Exam Focus: Distinguishing AUPs from audits/reviews, engagement acceptance conditions, and report elements.
Why AUPs Are a Deceptively Tricky Topic on the AUD Exam
Agreed-upon procedures engagements involve a CPA performing specific actions on a subject matter and reporting the factual findings. The key is that the CPA expresses no opinion or conclusion. The users of the report—the specified parties who agreed to the procedures—are left to draw their own conclusions from the findings.On the AUD exam, AUPs are a test of precision. While they may not occupy as much space as financial statement audits, they are a favorite topic for questions designed to trap candidates who rely on fuzzy knowledge. You will be tested on your ability to differentiate AUPs from other services, identify the strict conditions for accepting an engagement, and know the non-negotiable elements of the report. The most common error is confusing the limited nature of an AUP with the assurance provided in a review or audit. The difference is not a matter of degree; it is absolute. An AUP provides zero assurance.
To see how these concepts are tested, try VoraPrep's free CPA practice questions, which feature detailed explanations that highlight these critical distinctions.
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What Are the Core Rules for AUPs Under AT-C Section 215?
The governing standard is AT-C Section 215 of the AICPA Professional Standards. To accept and perform an AUP engagement, several strict conditions must be met. Think of these as a checklist; if any item is missing, the engagement cannot proceed as an AUP.Core Conditions for an AUP Engagement
- Independence: The CPA must be independent of the responsible party. This is a critical requirement. Unlike a compilation, where a lack of independence can be disclosed, it is not permitted for an AUP.
- Agreement on Procedures: The specified parties must agree on the procedures to be performed. These procedures must be specific and objective, avoiding vague terms like "review" or "evaluate."
- Specified Parties' Responsibility: The specified parties must take responsibility for the sufficiency of the procedures for their purposes. The CPA does not determine if the procedures are adequate; the users do.
- Measurable Subject Matter: The subject matter must be capable of reasonably consistent measurement or evaluation.
- Restricted Use: The report's use must be restricted to the specified parties. This is because others, unaware of the specific procedures, could misinterpret the factual findings.
- Optional Assertion: A written assertion from the responsible party about the subject matter is optional. The CPA can perform procedures directly on the subject matter itself.
AUPs vs. Other Engagements: A Clear Comparison
The exam will force you to distinguish AUPs from audits and reviews. Use this table to keep the differences straight.| Feature | Agreed-Upon Procedures (AUP) | Review | Audit |
|---|---|---|---|
| Assurance Level | None | Limited (Negative) Assurance | Reasonable (Positive) Assurance |
| Report Content | Factual findings from procedures | Conclusion ("not aware of any material modifications...") | Opinion ("...present fairly, in all material respects...") |
| Independence | Required | Required | Required |
| Report Use | Restricted to specified parties | Generally for management/board use | General use |
| Procedures | Specific procedures agreed upon by users | Primarily inquiry and analytical procedures | Risk assessment, tests of controls, substantive procedures |
One final trap to watch for is confusing an AUP with a consulting engagement. In a consulting engagement, a CPA might provide advice or recommendations. This is strictly forbidden in an AUP report, which must only contain factual findings.
AUPs in Action: A Worked Example
This scenario shows how to apply AUP principles and spot the common wrong answer. Scenario:SolarCo, a nonissuer, is seeking a $10 million line of credit from First National Bank (FNB). FNB requires verification of SolarCo's accounts receivable (A/R) balance of $5,000,000 as of December 31, 2025, and wants to know if any large accounts are over 90 days past due. SolarCo (the engaging party and responsible party) and FNB (a specified party) engage Green & Associates, CPAs, and agree to these specific procedures:
- Obtain an aged trial balance of accounts receivable as of December 31, 2025.
- Select all 50 customer accounts with balances exceeding $10,000.
- For each selected account, confirm the balance directly with the customer.
- For any unconfirmed balances, examine subsequent cash receipts and shipping documentation.
- Recalculate the aging for all 50 selected accounts.
Green & Associates finds that 48 of 50 accounts confirmed without exception. One account for $15,000 was confirmed to be 120 days past due (SolarCo's records showed 60 days). Another account for $20,000 was unconfirmed, with no subsequent cash receipts or shipping documents available.
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- Identify the Engagement Type: The client and a third party agreed on specific procedures for a specific subject matter (A/R). The request does not ask for an opinion or conclusion. This is a classic Agreed-upon Procedures engagement under AT-C Section 215.
- Verify AUP Conditions:
- Independence: Assume Green & Associates is independent. (Met)
- Agreement & Specificity: SolarCo and FNB agreed to specific, objective procedures. (Met)
- Sufficiency: SolarCo and FNB are responsible for deciding if these procedures are sufficient for their credit decision. (Met)
- Report Restriction: The report must be restricted to SolarCo and FNB. (Met)
- Formulate the Report Content: The CPA's role is to be a fact-finder. The report must include:
- Title: Must include "Independent Accountant's Report on Agreed-Upon Procedures."
- Addressees: SolarCo and First National Bank.
- Identification of Parties & Subject Matter: Identify SolarCo and FNB as the specified parties, the A/R balance as the subject matter, and SolarCo's management as the responsible party.
- List of Procedures Performed: Detail each of the five agreed-upon procedures verbatim.
- Factual Findings: State the specific results for each procedure. For example: "Of the 50 accounts selected, 48 confirmed without exception. Account #123 ($15,000) was confirmed as 120 days past due, a variance from company records. Account #456 ($20,000) could not be confirmed, and no alternative evidence was available."
- Required Statements: Include explicit statements that:
- The specified parties are responsible for the sufficiency of the procedures.
- The engagement was conducted in accordance with AICPA attestation standards.
- No opinion, conclusion, or assurance is provided.
- The report is intended solely for the use of the specified parties.
A tempting wrong answer would be for Green & Associates to issue a report stating, "Based on our procedures, we conclude that, with the exception of two accounts, SolarCo's accounts receivable are fairly stated."
Why this is wrong: This sentence provides a conclusion ("we conclude") and implies assurance ("fairly stated"). This violates the fundamental principle of an AUP. The CPA's job ends at reporting the facts. The judgment about what those facts mean for the A/R balance as a whole belongs entirely to SolarCo and FNB.Test Your Judgment: AUP Practice Questions
VoraPrep offers over 9,500 practice questions designed to target your weak areas. Here are a few to test your AUP knowledge. Sample Q1: Venture Capital Partners (VCP), a private equity firm, is considering acquiring Innovate Inc. VCP engages Apex CPAs to perform specific procedures on Innovate Inc.'s intellectual property portfolio, including verifying patent registration dates and examining licensing agreements. Apex CPAs performs these procedures and reports their findings. Which of the following statements about this engagement is true?- B is incorrect because AUPs provide no assurance, limited or otherwise.
- C is incorrect because a written assertion is optional in an AUP engagement. The procedures here are on factual items (dates, agreements), not a valuation assertion.
- D is incorrect because AUP reports are always restricted in use to the specified parties (VCP).
- A is incorrect because expressing an opinion (adverse or otherwise) is for an audit, not an AUP.
- C is incorrect because AUPs provide no assurance.
- D is incorrect because the CPA must report all findings from the procedures performed.
- A is incorrect because a prior audit is not a prerequisite.
- C is incorrect because AUPs provide no opinion.
- D is incorrect because AUP reports are always restricted.
To practice more questions and let VoraPrep's adaptive engine find your weak spots, check out our full CPA exam question bank.
Your 7-Day Sprint to Master Agreed-Upon Procedures
Use this intensive plan to lock in your AUP knowledge.
Day 1: Master the Core Distinctions.- Action: Create the comparison table from this article (AUP vs. Review vs. Audit) from memory. Focus on the "Assurance Level" and "Report Use" columns. This is the foundation.
- Action: Write down the 5-7 key conditions for accepting an AUP from AT-C 215. For each one, write a one-sentence scenario where that condition is violated (e.g., "Client wants the CPA to 'evaluate the adequacy' of inventory controls," which violates the specificity rule).
- Action: Outline a sample AUP report by hand. Don't just list the elements; write out the exact phrasing for the "no assurance" and "restricted use" paragraphs. These are heavily tested.
- Action: Do 10 AUP practice questions. For every wrong answer, write down why the distractor was tempting and what specific AUP rule it violated. Use VoraPrep's detailed explanations to guide you.
- Action: Write a two-sentence summary for an AUP, a compilation, and a consulting service, explaining how they differ in purpose and output. This clarifies the unique role of AUPs.
- Action: Find a Task-Based Simulation on AUPs. Focus on identifying appropriate vs. inappropriate procedures from a list or correcting a flawed draft of an AUP report.
- Action: Re-read AT-C Section 215's objectives and definitions. Do a final quiz of 5 MCQs. You should be able to answer them quickly and confidently by focusing on the "no assurance, restricted use" framework.
Understanding AUPs also sharpens your knowledge of the broader audit process, including how auditors must handle required communications with management and those charged with governance.
Frequently asked questions
How many questions on Agreed-upon procedures appear on the CPA exam?
You can expect 1-3 multiple-choice questions (MCQs) on AUPs in the AUD section. It can also appear in a Task-Based Simulation (TBS), often testing your knowledge of report elements or engagement acceptance criteria. It's a foundational topic the AICPA uses to test precision.What's the best way to study for Agreed-upon procedures?
Focus on the core concept of "no assurance" and the specific conditions in AT-C Section 215. The most effective method is practicing questions that force you to distinguish AUPs from audits and reviews, paying close attention to traps involving assurance levels and report distribution.Are Agreed-upon procedures tested in simulations (TBS)?
Yes, AUPs can be tested in both MCQs and Task-Based Simulations. A TBS might require you to evaluate engagement acceptance criteria, select appropriate procedures from a list, or identify errors in a draft AUP report.How long should I spend studying Agreed-upon procedures?
Dedicate 2-4 focused hours to AUPs. This should include reading AT-C Section 215, working through an example like the one above, and doing 10-15 practice questions. The goal is deep understanding of the principles, not just memorization.--- Ready to Pass Your CPA Exam? VoraPrep's adaptive learning engine targets your weak areas, ensuring efficient study. With over 9,500 practice questions and a 24/7 Vory tutor, you'll be fully prepared. Visit voraprep.com to get started.
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