Agreed-Upon Procedures

Often organizations do not need a complex audit such as a statutory audit. Globally and in Hungary, there is an increasing need to improve the reliability of financial and non-financial information according to some criteria. The areas where third-party verification may be most needed are financing, grants or compliance with legal obligations.

 Examples of the subject matter:

The subject matter may be financial or non-financial information. Examples of subject matters include:

  • financial accounting, expenditure claimed from a funding program,
  • revenues for determining membership fees, royalties, rent or franchise fees based on a percentage of revenues,
  • the company’s financing agreements,
  • performance assessment indicators in the remuneration policy,
  • capital adequacy ratios for regulatory authorities.

But there may also be subject matters that are non-financial information:

  • number of passengers reported by an airline,
  • volume of greenhouse gas emissions reported to a regulatory authority,
  • observation of destruction of fake or defective goods reported to a regulatory authority,
  • data generating processes for lottery draws reported to a regulatory authority.

 The agreed-upon procedures report

Content of the agreed-upon procedures report:

  • the purpose of the agreed-upon procedures report,
  • the responsibilities of the engaging party and the responsible party,
  • the responsibilities of the practitioner
    • professional, ethical and quality control responsibilities
  • the procedures performed and the findings.

The users of the agreed-upon procedures report are very specific, and it is therefore appropriate for the auditor to limit the use of the agreed-upon procedures report to those persons. It may be misleading if other users draw inappropriate conclusions from the agreed-upon procedures report. On the basis of the auditor’s findings, the users of the agreed-upon procedures report are in a position to decide. The procedures to be performed will be determined accordingly.

An example to show what the agreed-upon procedures report should contain:

  • A title that clearly indicates that the user is reading an agreed-upon procedures report!
  • Addressees specified in the engagement contract.
  • The purpose of the agreed-upon procedures report and a statement that the report may not be appropriate for any other purposes. There may be restrictions on the use and distribution of the report, which is highly recommended for this type of engagement. In this case, the text in grey may be added to this section.
  • The client is responsible for what they entrust us with.
  • The practitioner is responsible for ensuring that the engagement is performed in accordance with the requirements of ISRS 4400 (Revised). Once the standard enters into force in Hungary, it can be referred to as the Hungarian national standard.
  • The auditor indicates that this type of engagement is not an assurance engagement and therefore does not express an opinion on the results of the procedures.
  • The auditor notes that they comply with the relevant ethical requirements, which do not include independence requirements.
  • This section provides guarantee to the client that the service provided is subject to an internal quality control system established and operated by the audit firm.
  • The practitioner does not express an opinion in the report but only presents the results of the procedures as findings in an objective manner.

To [Addressee]

Purpose of the Agreed-Upon Procedures Report and Restrictions on Use and Distribution

Our report is solely for the purpose of assisting [Intended User] in determining whether the [Engaging Party]’s procurement of [xyz] products is compliant with [Intended User]’s procurement policies and may not be suitable for another purpose. This report is intended solely for [Engaging Party] and [Intended Users], and should not be used by, or distributed to, any other parties.

Responsibilities of the Engaging Party and the Responsible Party  

[Engaging Partly] has acknowledged that the agreed-upon procedures are appropriate for the purpose of the engagement. [Engaging Party] [also the Responsible Party] is responsible for the subject matter on which the agreed-upon procedures are performed.

Practitioner’s Responsibilities

We have conducted the agreed-upon procedures engagement in accordance with the Hungarian National Standard on Related Services 4400 (Revised) „Agreed-Upon Procedures Engagements”. An agreed-upon procedures engagement involves our performing the procedures that have been agreed with [Engaging Party], and reporting the findings, which are the factual results of the agreed-upon procedures performed. We make no representation regarding the appropriateness of the agreed-upon procedures.

This agreed-upon procedures engagement is not an assurance engagement. Accordingly, we do not express an opinion or an assurance conclusion.

Had we performed additional procedures, other matters might have come to our attention that would have been reported.

Professional Ethical and Quality Control

We have compiled with the ethical requirements in [describe the relevant ethical requirements]. For the purposes of this engagement, there are no independence requirements that we are required to comply with.

Our firm applies International Standard on Quality Control (ISQC) 1, Quality Control for Firms that Perform Audits and Reviews of Financial Statements, and Other Assurance and Related Services Engagements, and accordingly, maintains a comprehensive system of quality control including documented policies and procedures regrading compliance with ethical requirements, professional standards and applicable legal and regulatory requirements.


Procedures and Findings

We have performed the procedures described below, which were agreed upon with [Engaging Party] in the terms of engagement on the procurement of [xyz] products.

Procedures Findings


[Practitioner’s signature]

[Date of practitioner’s report]

[Practitioner’s address]

MGI-BPO’s expert have extensive experience in agreed-upon procedures engagements in accordance with ISRS 4400 Standard. We ensure objectivity and independence in the procedures, while working with our clients to achieve optimal results.

Our aim is to help our clients reduce business risks and support the business decision-making process. Performing agreed-upon procedures engagements in accordance with ISRS 4400 increases your company’s credibility and improves customer confidence in your business.

Please contact us if you are interested in agreed-upon procedures or would like more information about this service. Our team of experts is ready to answer your questions and provide you with more information.