CPA Exam — AUDForming Conclusions and ReportingEasy
A CPA is engaged to perform an agreed-upon procedures engagement concerning a client's compliance with specific loan covenants. The practitioner's report on this engagement should include which of the following elements?
- AA conclusion on the fairness of the presentation of the loan covenants.
- BAn opinion on the client's overall compliance with all loan covenants.
- CA statement that the report is intended solely for the specified parties.
- DA statement of positive assurance regarding the findings.
Show answer & explanationAnswer & explanation
Correct answer: C. A statement that the report is intended solely for the specified parties.
Agreed-upon procedures reports are restricted in use to the specified parties who agreed to the procedures, as they are tailored to their specific needs and may not be appropriate for general distribution.
Why the other options are wrong
- A. Agreed-upon procedures engagements do not provide a conclusion on the fairness of presentation.
- B. Agreed-upon procedures engagements do not provide an opinion or assurance on overall compliance.
- D. Agreed-upon procedures engagements provide negative assurance or a summary of findings, not positive assurance.
Agreed-Upon Procedures Report Restriction
An agreed-upon procedures report is restricted in its distribution and use to only those parties who agreed to the procedures performed, as specified in the report.
- Report is restricted to specified parties.
- Does not provide an opinion or assurance.
- Summarizes findings from specific procedures.
Memory trick: An AUP report is like a secret handshake; only those in the club can see it.