Defining the Purpose and Users
Documenting the reason the report is requested, the parties expected to use it, and the subject matter on which the procedures will be performed.
Assurance Services
Agreed-Upon Procedures Reports
A professional engagement in which the certified public accountant performs specific procedures agreed with the engaging party, then issues a report describing the procedures performed and the findings, that is, the factual results arising from them. The engagement is not an audit, a review, or an assurance engagement, and it contains no opinion or assurance conclusion; users of the report evaluate the results and draw their own conclusions.
Professional and Regulatory Framework
When the Need for This Engagement Arises, and Under Which Standard It Is Performed
Agreed-upon procedures reports are not a general requirement for all entities. The need for them arises when a regulator, bank, financier, or contracting party requires specific procedures to be performed, or when management needs factual results on particular accounts, transactions, or items without requesting an audit or a review.
The engagement is performed under International Standard on Related Services 4400, Agreed-Upon Procedures Engagements, in its revised form as endorsed in Saudi Arabia. The standard applies to financial and non-financial subject matters, and governs the responsibilities of the certified public accountant and the form and content of the agreed-upon procedures report.
The following professional requirements are associated with the performance of these engagements:
- International Standard on Quality Management 1: applies to the system of quality management at the firm that performs related services engagements, including agreed-upon procedures engagements.
- International Standard on Quality Management 2: applies where International Standard on Quality Management 1 or the firm's policies require an engagement quality review for a particular engagement.
- The International Code of Ethics for Professional Accountants, including International Independence Standards, as endorsed in Saudi Arabia: governs compliance with integrity, objectivity, professional competence and due care, confidentiality, and professional behaviour, and defines the independence requirements where they apply.
Article 7 of the Law of the Accounting and Auditing Profession also requires the certified public accountant to comply with the rules, conduct, and ethics of the profession and with the endorsed professional and technical standards.
What the Service Covers
From Defining the Purpose to Issuing the Report
The engagement is built step by step on a documented agreement between the parties, from documenting the purpose through to presenting the findings in the report.
Formulating the Procedures
Agreeing objective procedures defined as to their nature, timing, and extent, and the sources of information needed to perform them.
Defining the Population and Sample
Identifying the transactions, accounts, or documents covered, and the method of selecting items where a procedure does not cover the entire population.
Performing the Procedures
Applying comparisons, reconciliations, recalculation, tracing, confirmations, observation, and other agreed-upon procedures.
Preparing the Report
Presenting each procedure performed and the findings arising from it, including the exceptions that arose, in factual, verifiable wording.
Independence and Scope Boundaries
Clear Responsibilities for Each Party, With Precise Professional Boundaries
HHAB's responsibility is limited to performing the procedures specified in the engagement terms and reporting the factual findings arising from them. The work does not extend automatically to transactions, periods, or documents not covered by the agreed-upon procedures.
Nature of the Engagement
This work is not an audit providing reasonable assurance, nor a review providing limited assurance, nor any other assurance engagement. The report therefore contains no opinion, no assurance conclusion, and no judgement on the fair presentation of the information or the soundness of the subject matter of the procedures as a whole.
Responsibility of the Engaging Party
The engaging party bears responsibility for acknowledging that the procedures are appropriate for the intended purpose. HHAB does not provide a statement that the procedures are sufficient for the purpose of the users.
Responsibility of the Responsible Party
The responsible party bears responsibility for the subject matter of the procedures, for the accuracy and completeness of the records and information provided, and for making available the documents and persons needed to perform the work.
Role of the Intended Users
The intended users evaluate the procedures and the findings for themselves, and draw their own conclusions from them.
Independence and Ethical Requirements
HHAB complies with the ethical requirements endorsed in Saudi Arabia. The independence position for each engagement is determined under the applicable ethical, statutory, or regulatory requirements and the terms of the engagement. Where independence requirements exist, they must be complied with and disclosed in the report; where no independence requirements apply, the report must state this. The absence of an independence requirement does not waive compliance with objectivity and the remaining ethical principles.
No Recommendations Within the Findings
Recommendations and opinions are not presented as findings in the agreed-upon procedures report. Any other service requested by the entity is subject to a separate professional assessment and a separate scope, so that it is not commingled with this engagement and does not impair independence where independence applies.
Who This Service Is For
Designed for Entities That Need Documented Factual Results
This engagement serves entities that need factual results from specific procedures, without requesting a level of assurance.
01
Entities Subject to Regulatory Requirements
Entities required to provide a report on specific procedures set out in the instructions of a regulatory or supervisory authority.
02
Borrowers and Financiers
Entities, banks, and financiers whose agreements require verification of specific accounts, conditions, or contractual indicators.
03
Contract and Procurement Parties
Parties that need invoices, quantities, prices, payments, or execution documents compared with the requirements of a specific contract.
04
Finance Departments and Audit Committees
Parties that need factual results on an account, a balance, or a group of transactions without requesting a level of assurance.
05
Local Content Ratio Audit Needs
This use is presented in detail on the dedicated Local Content Ratio Audit page of the website.
How It Works
How the Procedures Are Determined
The engaging party and HHAB agree the procedures, and where appropriate the other relevant parties take part in agreeing them. The engaging party must acknowledge that the procedures are appropriate for the purpose of the engagement, while HHAB ensures that they can be described, performed, and reported on in clear, objective terms.
The procedures are determined according to:
- The purpose of the engagement
- The source of the requirement
- The intended users
- The subject matter and period
- The population covered
Where quantitative thresholds for reporting exceptions exist, they must be agreed and stated within the description of the procedures.
Where a professional opinion or a conclusion on the subject matter as a whole is required, an agreed-upon procedures report may not be the appropriate type of engagement.
Where No Numerical Calculation Applies
Verifiable procedures are formulated, such as comparing a document with a contractual requirement, tracing a transaction to a specified record, matching data between two sources, observing a process, or inquiring into a specific fact and documenting the response. Vague descriptions that would require HHAB to judge whether a matter is reasonable, sufficient, or appropriate without an agreed objective criterion are not used.
Methodology
A Disciplined Execution Path
From understanding the purpose through to issuing the report, everything is documented in writing between the parties.
1
Understanding the Purpose
Identifying the reason the report is requested, the requesting party, the intended users, and the subject matter and period of the procedures.
2
Setting the Scope
Formulating the procedures, their nature, timing, and extent, the population or sample, and the thresholds for reporting exceptions.
3
Documenting the Engagement
Agreeing in writing the responsibilities, procedures, deliverables, independence requirements, and the use and distribution of the report.
4
Performing the Procedures
Applying the agreed-upon procedures to the specified information and documents and documenting the findings and exceptions.
5
Issuing the Report
Presenting the purpose, the procedures performed, the resulting findings, the responsibilities of the parties, and the required professional disclosures.
Deliverables
Documented Deliverables at Every Stage of the Engagement
From the engagement letter through to the final report, written deliverables of defined scope are delivered.
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A written engagement letter defining the purpose, the responsibilities, the intended users, and the terms of performing the work
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A final schedule of the agreed-upon procedures showing the nature, timing, and extent of each procedure
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A list of the information and documents required to perform the procedures
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An agreed-upon procedures report describing the procedures performed, the factual findings, and the exceptions relating to each procedure
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Schedules, reconciliations, or appendices arising directly from the procedures, where the engagement scope provides for their inclusion in the report
The deliverables do not include HHAB's internal working papers, unless a law or regulation requires their disclosure.
Why HHAB
A Licensed Professional Firm, With Documented Execution Experience
A Saudi Professional License
A Saudi professional firm licensed by the Saudi Organization for Chartered and Professional Accountants.
Registration With the Local Content and Government Procurement Authority
Registered with the Local Content and Government Procurement Authority as an independent auditor.
Prior Experience With Listed Companies
The managing partner has prior professional experience serving listed companies at audit firms among the Big Four global audit firms.
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HHAB is a Saudi professional firm licensed by the Saudi Organization for Chartered and Professional Accountants.
HHAB performs agreed-upon procedures engagements under International Standard on Related Services 4400 in its revised form as endorsed in Saudi Arabia, with a report presenting the procedures performed and the resulting factual findings.
FAQ
Frequently Asked Questions on Agreed-Upon Procedures
What is the difference between an agreed-upon procedures report, an audit, and a review?
An audit is an assurance engagement that provides reasonable assurance and concludes with the expression of a professional opinion under the International Standards on Auditing as endorsed in Saudi Arabia. A review provides limited assurance within a narrower scope than an audit, is generally used for interim financial information, and does not substitute for an audit where an audit is required.
An agreed-upon procedures report provides neither reasonable assurance nor limited assurance, and contains no opinion or assurance conclusion. It presents only the procedures performed and the factual findings, and users of the report draw their own conclusions.
When is an agreed-upon procedures engagement appropriate?
It is appropriate when the users can define objective procedures that serve a clear purpose, such as reconciling payments to a contract, recalculating a financial indicator, verifying the existence of particular documents, or comparing data between two systems. It is not appropriate where a general opinion or an assurance conclusion on the subject matter as a whole is required.
Who determines the procedures that HHAB will perform?
The procedures are agreed between HHAB and the engaging party, and, where appropriate, the other relevant parties. The procedures may be based on the requirements of a regulator, a bank, a financier, or a contract, but the engaging party remains responsible for acknowledging that they are appropriate for the purpose of the engagement.
Can procedures specified by a regulator or a bank be used?
Yes, provided the procedures can be performed and are described clearly and objectively. Where the body specifies only the nature of a procedure, the agreement must be completed as to its timing, extent, the population or sample, and the reporting thresholds, so that the scope of the work is clear.
What is meant by factual findings?
Factual findings are the objective, verifiable results arising directly from the performance of each procedure. The result may be that two amounts agree, that a specific difference exists, that a document is not available, or that a documented condition is met. Findings do not include an opinion, a recommendation, or a judgement on the significance of a result unless the procedure defines an objective criterion for that purpose.
What happens if the work does not involve a numerical calculation?
Non-computational procedures may be agreed, such as matching, tracing, confirmation, physical inspection, observation, and inquiry into a specific fact. The document, condition, or reference against which the comparison will be made, and the factual result to be reported, must be specified, without requiring HHAB to issue an unspecified judgement.
Must all transactions be examined?
Not necessarily. The procedures may cover the entire population or a defined sample. Where a sample is used, its size, the method of selecting it, and the population from which it was drawn must be agreed. The findings are limited to the items on which the procedures were performed, and sample results do not automatically become a conclusion about the population as a whole.
How does the report present exceptions?
The report presents the exceptions that arose in the performance of each procedure factually, with the detail needed to understand them. Where a quantitative reporting threshold has been agreed, it is stated within the description of the procedure. HHAB does not judge the materiality of an exception or its effect unless the procedure includes a specific objective criterion for that purpose.
Can the procedures be modified after the work begins?
Yes, where information emerges that calls for modification, provided the modified procedures are agreed with the engaging party and the modification is documented in writing before the procedures are performed or reported on. Procedures may not be added or removed unilaterally.
Can the report be distributed to any party?
This is determined by the purpose of the engagement, the intended users, and any statutory or contractual requirements. The report may restrict its use or distribution to specified parties where it has been prepared for their particular needs. The report also makes clear that it may not be suitable for another purpose.
Does the report guarantee the detection of all errors or fraud?
No. The work is limited to the agreed-upon procedures, and other matters might have been identified had additional procedures been performed. The engagement is not an audit designed to obtain reasonable assurance regarding material misstatements arising from error or fraud.
Is HHAB required to be independent in all agreed-upon procedures engagements?
ISRS 4400 does not prescribe a uniform independence requirement for all engagements. Independence requirements may arise from the professional code, a law, a regulation, the requirements of a regulator, or the terms of the engagement. HHAB assesses the applicable requirements before accepting the work, and the report is required to disclose either that independence requirements existed and were complied with, or that no independence requirements applied to the engagement.
Note: This content is general information, does not constitute a professional or legal opinion on any specific case, and does not confirm that an agreed-upon procedures report is suitable for all purposes. The engagement type, the procedures, the users, the independence requirements, and the use of the report are determined after studying the purpose and the relevant statutory, regulatory, and contractual requirements. Acceptance of the engagement is subject to completion of professional acceptance procedures, assessment of conflicts and of independence where applicable, written agreement on the terms, and the availability of the necessary information. Reports intended for use outside Saudi Arabia are additionally subject to the requirements of the receiving body and the relevant legal jurisdiction.
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