The assurance practitioner shall comply with this standard and with the terms of the engagement agreed with the engaging party.

When conducting an agreed-upon procedures engagement, the assurance practitioner shall comply with ethical requirements equivalent to the ethical requirements applicable to Other Assurance Engagements,^[4] including those pertaining to independence, unless the engaging party has explicitly agreed to modified independence requirements in the terms of the engagement.^[5]  If modified independence requirements have been agreed in the terms of the engagement, the level of independence applied shall be described in the report of factual findings.^[6] (Ref: Para. A1)

The assurance practitioner shall obtain an understanding of the needs and objectives of the intended users, including a class of intended users, of the assurance practitioner’s report of factual findings and the purpose for which that report will be used. (Ref: Para. A2-A3)

A regulator or representative of a class of users, industry or the accounting profession may specify the agreed-upon procedures to be performed to meet the needs of a class of intended users.  In these circumstances, the assurance practitioner shall be satisfied that the needs of the class of users for whom the engagement is intended have been appropriately considered and addressed.

Before accepting an agreed-upon procedures engagement, the assurance practitioner shall determine that the persons who are to perform the engagement collectively have the appropriate competence and capabilities to perform the procedures.

The assurance practitioner shall not accept an agreed-upon procedures engagement if, in the professional judgement of the assurance practitioner:

1. the provision of factual findings alone which provide no assurance is unlikely to meet the needs of the intended users; or (Ref: Para. A3)
2. the circumstances of the engagement indicate that the intended users are likely to construe the outcome of the engagement as providing an assurance conclusion about the subject matter; or
3. use of the report of factual findings cannot be restricted to the engaging party and any intended users identified, due to legal requirements or other circumstances; or
4. all of the elements of an assurance engagement^[7] are met; or (Ref: Para. A4-A6)
5. the engagement has no rational purpose; or
6. the circumstances of the engagement indicate that it will be necessary for the assurance practitioner to do any of the following:
   1. determine the sufficiency of the procedures to be performed; (Ref: Para. A7)
   2. perform a risk assessment in order to determine the procedures to be undertaken; (Ref: Para. A8)
   3. evaluate the findings in order to determine the sufficiency and appropriateness of the evidence gathered; (Ref: Para. A8) or
   4. reach a conclusion or form an opinion based on the evidence gathered. (Ref: Para. A8)

In order to establish whether the preconditions of an agreed-upon procedures engagement are present, the assurance practitioner shall obtain agreement from management [and, where appropriate, those charged with governance and intended users] that it acknowledges and understands its responsibility:

1. for determining the adequacy or otherwise of the procedures agreed to be performed;
2. for determining whether the factual findings reported, in combination with any other information obtained, provide an appropriate basis for any conclusions which management or the intended users wish to draw on the subject matter;
3. to provide the assurance practitioner with:
   1. access to all information of which management is aware that is necessary for the performance of the procedures agreed;
   2. additional information that the auditor may request from management for the purpose of the engagement; and
   3. unrestricted access to persons within the entity from whom the assurance practitioner requires co-operation in order to perform the procedures agreed.

The assurance practitioner shall agree the terms of the agreed-upon procedures engagement with the engaging party, and intended users who use the report.^[8] If the intended users of the report of factual findings are not signatories to the terms of the engagement, those intended users shall be identified in the terms of the engagement and all other parties shall be excluded from using the report. (Ref: Para. A9-A10)

The agreed terms of the engagement shall be recorded in an engagement letter or other suitable form of written agreement and shall include: (Ref: Para. A11-A13)

1. the objective and scope of the engagement;
2. confirmation of the assurance practitioner‟s acceptance of the appointment;
3. the nature of the engagement, including a statement that the procedures performed will not constitute a reasonable or limited assurance engagement and that accordingly no assurance will be provided;
4. a statement that intended users are expected to conduct their own assessment of the findings, combined with other information available to them and, if necessary, perform further procedures in order to obtain sufficient appropriate evidence on which to base any conclusion on the subject matter;
5. the assurance practitioner‟s responsibilities to the engaging party and other specified parties;
6. confirmation that the assurance practitioner will apply ethical requirements equivalent to those applicable to Other Assurance Engagements or, if modified independence requirements have been agreed, the level of independence agreed;
7. identification of the subject matter to which the procedures will be applied;
8. the nature, timing and extent of the specific procedures to be performed;
9. management‟s responsibilities;
10. identification of the intended users of the report including those users who may not be party to the terms of the engagement, such as a class of user, regulator or bank;
11. a statement that the use of the report of factual findings would be restricted to the engaging party, who has agreed to the procedures to be performed, and the intended users identified; and
12. reference to the expected form of any reports to be issued by the assurance practitioner, which may be illustrated by attaching to the engagement letter a draft of the report of factual findings that will be issued, omitting the factual findings.

The nature, timing and extent of procedures shall be specified in the terms of the engagement in sufficient detail such that the assurance practitioner will not be required, during the course of the engagement, to exercise professional judgement in determining or modifying the procedures to be performed. (Ref: Para. A11)

When conducting an agreed-upon procedures engagement, if the assurance practitioner is unable to perform the exact nature, timing or extent of procedures agreed, but alternative procedures can be performed and the engaging party requires those procedures to be performed, then new terms of the engagement shall be agreed with the engaging party in writing.

The assurance practitioner shall plan the work so that the engagement will be performed in an effective manner, in accordance with the terms of the engagement and this standard.

The engagement plan for an agreed-upon procedures engagement shall be restricted to the nature, timing and extent of procedures agreed in the terms of the engagement.  The plan does not include alternative or further procedures unless agreed with the engaging party in amended terms of the engagement. (Ref: Para. A14)

The assurance practitioner does not perform a risk assessment for an agreed-upon procedures engagement, as the nature, timing and extent of procedures to be performed are agreed with the engaging party rather than determined by the assurance practitioner in response to assessed risks.

The assurance practitioner does not apply materiality to designing the procedures to be performed nor to assessing the factual findings to determine whether the subject matter information is free from material misstatement or non-compliance, as this is the responsibility of the intended users.

The assurance practitioner shall take responsibility for the overall quality of the agreed-upon procedures engagement and shall apply the firm’s quality control procedures equivalent to those applicable to Other Assurance Engagements.^[5]

Throughout the engagement, the assurance practitioner shall remain alert, through observation and making enquiries as necessary, for evidence of non-compliance with relevant ethical requirements, including independence, by members of the engagement team.  If matters come to the assurance practitioner’s attention that indicate that members of the engagement team have not complied with relevant ethical requirements, the assurance practitioner shall determine the appropriate action.

The assurance practitioner shall be satisfied that the engagement team^[10] and any experts engaged who are not part of the engagement team, collectively have the appropriate competence, capabilities and resources to perform the agreed-upon procedures in accordance with this standard.

The assurance practitioner shall take responsibility for the direction, supervision and performance of the engagement and the accurate reporting of factual findings.

When the assurance practitioner uses the work of another assurance practitioner, internal auditor or an expert, the assurance practitioner shall evaluate the adequacy of their work, including their objectivity and technical competence in conducting the procedures, whether the nature, timing and extent of procedures conducted agrees with procedures in the terms of the engagement and whether the factual findings communicated detail adequately the result of the procedures conducted.

The assurance practitioner shall document:

1. issues identified with respect to compliance with relevant ethical requirements and how they were resolved;
2. conclusions on compliance with independence requirements equivalent to „Other Assurance Engagements‟ or modified independence agreed;
3. conclusions reached regarding the acceptance and continuance of client relationships and acceptance of the agreed-upon procedures engagement;
4. the nature, timing and extent of procedures performed and the factual findings obtained, as identified in the agreed-upon procedures report; and
5. evidence that the engagement was carried out in accordance with this standard and the terms of the engagement.

As no assurance is to be provided, the assurance practitioner shall carry out only the procedures agreed in the terms of the engagement and use the results of the procedures to provide a report of factual findings. (Ref: Para. A15-16)

If the engaging party’s requirements alter during the course of the engagement which require the assurance practitioner to draw conclusions from the findings, the terms of the agreed-upon procedures engagement cannot be extended to the provision of assurance.  However, a new engagement may be agreed for the provision of assurance, if appropriate, to be conducted in accordance with applicable AUASB standards.

The assurance practitioner shall provide a report of factual findings for the agreed-upon procedures engagement.  In contrast to an assurance report, a report of factual findings does not include an evaluation of those findings in order to draw a conclusion or form an opinion. (Ref: Para. A17)

The assurance practitioner shall not express a conclusion or opinion in an agreed-upon procedures engagement as the assurance practitioner has not performed a risk assessment, responded to assessed risks by determining the procedures to be performed or assessed whether sufficient appropriate evidence has been obtained as a reasonable basis for expressing a conclusion.

If the assurance practitioner is undertaking an agreed-upon procedures engagement in parallel with an assurance engagement, the factual findings from the agreed-upon procedures engagement shall be presented separately from the report on the assurance engagement.

Use of the report shall be restricted to those parties that have either agreed to the procedures to be performed or have been specifically included as intended users in the engagement letter since others, unaware of the reasons for the procedures, may misinterpret the results.

The report of factual findings for an agreed-upon procedures engagement shall contain: (Ref: Para. A18-A19)

1. a title;
2. an addressee (ordinarily the engaging party);
3. identification of the specific information to which the procedures have been applied;
4. a statement that the procedures performed were those agreed with the engaging party;
5. a statement that the engagement was performed in accordance with ASRS 4400;
6. a statement that either ethical requirements equivalent to those applicable to Other Assurance Engagements have been complied with, including independence, or, if modified independence requirements have been agreed in the terms of the engagement, a description of the level of independence applied;
7. identification of the purpose for which the agreed-upon procedures engagement was performed;
8. a statement that the responsibility for determining the adequacy or otherwise of the procedures agreed to be performed by the assurance practitioner is that of the engaging party;
9. a listing of the specific procedures performed, detailing the nature, timing and extent of each procedure;
10. a description of the assurance practitioner‟s factual findings in relation to each procedure performed, including sufficient details of errors and exceptions found;
11. identification of any of the procedures agreed in the terms of the engagement which could not be performed and why that has arisen;
12. a statement that the procedures performed do not constitute either a reasonable or limited assurance engagement and, as such, no assurance is provided;
13. a statement that had the assurance practitioner performed additional procedures, a reasonable assurance engagement or a limited assurance engagement, other matters might have come to the assurance practitioner‟s attention which would have been reported;
14. a statement that use of the report is restricted to those parties identified in the report, who have agreed to the procedures to be performed or were identified in the terms of the engagement;
15. a statement (when applicable) that the report relates only to the elements, accounts, items or financial and non-financial information specified and that it does not extend to the entity‟s financial report, or other specified report, taken as a whole;
16. the date of the report;
17. the assurance practitioner‟s address; and
18. the assurance practitioner‟s signature.

If the assurance practitioner is required by law or regulation to use a specific layout or wording for the report of factual findings, the report of factual findings shall refer to ASRS 4400 only if the assurance practitioner’s report includes, at a minimum, each of the elements in paragraph 43.

Law or regulation of the relevant jurisdiction may prescribe the layout or wording of the report of factual findings in a form or in terms which are significantly different from the requirements of this standard. In these circumstances, the assurance practitioner shall evaluate:

1. whether intended users might misunderstand the factual findings reported and the fact that no assurance is provided; and, if so;
2. whether additional explanation in the report of factual findings can mitigate possible misunderstanding.

If the assurance practitioner considers that additional explanation in the report of factual findings cannot mitigate possible misunderstanding, the auditor shall not accept the engagement unless required by law or regulation to do so. As an agreed-upon procedures engagement conducted in accordance with such law or regulation does not comply with this standard, the assurance practitioner shall not include any reference in the report of factual findings to the engagement having been conducted in accordance with ASRS 4400. (Ref: Para. A20)

The assurance practitioner shall not issue modifications or an emphasis of matter in a report of factual findings, as no conclusion or opinion is expressed. Nevertheless, the following matters, if applicable, are reported as part of the factual findings:

1. errors or exceptions identified as a result of the procedures performed, regardless of whether they were subsequently rectified by the entity; and (Ref: Para. A21)
2. the inability of the assurance practitioner to perform any of the agreed-upon procedures. (Ref: Para. A22)

The report of factual findings for an agreed-upon procedures engagement shall be clearly distinguished from an assurance report in that it shall not contain:

1. a statement of compliance with AUASB standards, except for reference to ASRS 4400;
2. inappropriate use of the terms “assurance”, “audit”, “review”, “opinion” or “conclusion”; or
3. any statement that could reasonably be mistaken for a conclusion designed to enhance the degree of confidence of intended users about the outcome of the evaluation or measurement of a subject matter against criteria.^[11]