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IAASB awaits comments on Agreed-Upon Procedures revisions

The International Audit and Assurance Standards Board (IAASB) is eagerly awaiting responses on proposed revisions to its international standard on related services, Agreed-Upon Procedures Engagements (AUP), due by mid-March, reports Jamie Tomlin, chair of the LSCA Technical Committee.

Jamie Tomlin

March 2019

Although reports issued under AUP assignments do not have the same public visibility as many audit reports, their importance should not be ignored. A continued growth in their demand is testament to this importance.

They are a useful engagement offering for an auditor to have in their services toolbox as they can be directed to specific client needs, and for both financial and non-financial matters.

How do the proposals differ from the existing standard?

  • They include commentary on professional judgment. While the report refers to (factual) findings, there are aspects of an AUP which do require judgment. These vary from judgment in accepting the engagement, judgment in the application of ethical requirements, and judgment applied in actually performing the procedures and how they are reported on. The exposure draft acknowledges that there is a possible conflict between the degree of judgment that may be required and the need to report findings objectively. 
  • Independence transparency has been enhanced to ensure that a reader of the report has clarity about whether the practitioner is, or if not required to be, is not, independent.
  • A requirement for ‘pre-conditions’ to an assignment. These require the engaging party to acknowledge the procedures expected to be performed and that the findings therefrom can be described objectively.
  • If an expert is used by the practitioner, guidance is included about the respective responsibilities and how their use may impact the report. Report restrictions have been clarified, including that the report does not need to be restricted, but if it is, there is some new application material on this.

Although this may not have the glamour of a new IFRS, or even the excitement of a revised way of thinking about how we must audit estimates, being ‘merely’ a framework to follow, its importance should not be underestimated. While the auditing profession is grappling with the quality issue, this is a standard which is very relevant as demand for more focused, specific work grows.

Despite the recent audit issues, the profession is well placed to provide this, and a robust framework should help ensure we remain the preferred choice for this.

Jamie Tomlin is chair of the LSCA Technical Committee.

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