CPA Exam — AUDForming Conclusions and ReportingMedium
A CPA is engaged to perform an agreed-upon procedures engagement concerning a client's compliance with certain loan covenants. The practitioner's report should include a statement that:
- AThe practitioner expresses an opinion on the client's compliance with loan covenants.
- BThe practitioner provides negative assurance regarding the client's compliance.
- CThe report is intended solely for the specified parties.
- DThe engagement was performed in accordance with generally accepted auditing standards.
Show answer & explanationAnswer & explanation
Correct answer: C. The report is intended solely for the specified parties.
Agreed-upon procedures engagements do not provide an opinion or assurance. Instead, they report findings. To avoid misinterpretation, the report must state that its use is restricted to the specified parties who agreed to the procedures.
Why the other options are wrong
- A. An opinion is provided in an examination engagement, not agreed-upon procedures.
- B. Negative assurance is provided in a review engagement, not agreed-upon procedures.
- D. Agreed-upon procedures are performed in accordance with attestation standards, not generally accepted auditing standards (GAAS), which apply to financial statement audits.
Agreed-Upon Procedures Report
A report issued after performing specific procedures agreed upon by the practitioner and the engaging party, reporting only on the findings without providing an opinion or assurance.
- Provides no assurance (neither positive nor negative).
- Report lists procedures performed and findings.
- Distribution of the report is restricted to specified parties.
Memory trick: AUP Reports: Just the FACTS, For Restricted Access.