SRS 4400 Engagements to perform agreed upon procedures regarding financial information

The aim of SRS 4400 (Standard on Related Services) is to provide standards and guidance on the professional responsibilities of an auditor when the engagement for performing agreed-upon procedures concerning financial information is assumed and on the content and form of the report which the auditor would issue following such engagements.

Objectives of the agreed-upon procedures engagements

The agreed-upon procedures engagement requires an auditor to execute procedures of the audit nature to which the entity, the auditor, and the relevant third parties have decided and to report on the actual findings. No assurance is communicated by the auditor in his/her report since he/she basically offers a report of factual findings of the agreed-upon procedures.

Instead, the users of such report themselves assess and evaluate the procedures and findings communicated by the auditor and form conclusions of their own based on the work performed by such auditor.

General Principles of an Agreed-upon Procedures Engagement

An auditor should adhere to the Code of Ethics, issued by ICAI (Institute of Chartered Accountants of India). Ethical principles which govern the professional responsibilities of the auditor for such type of engagement include:

• Integrity
• Due care
• Professional competence
• Confidentiality
• Objectivity
• Technical standards
• Professional conduct

Where an auditor isn’t independent, the auditor needs to provide a statement to such effect in his/her report of the factual findings. The auditor must conduct the agreed-upon procedure engagement as per SRS 4400 and in conformity with terms of the engagement.

Planning

An auditor must plan his/her work in a manner that the engagement is executed efficiently.

Documentation

All matters which are crucial and help the auditor to provide evidence in support of his/her report of factual findings, and evidence that such an engagement was executed as per SRS 4400 and in conformity with terms of the engagement.

Procedures and Evidence

The auditor must execute the procedures agreed-upon and utilize the evidence gathered by him/her as the basis for his/her report of factual findings. The procedures employed by an auditor in an engagement to perform agreed-upon procedures could include:

• Inquiry and analysis
• Observation
• Inspection
• Comparison, re-computation, and other tests for clerical accuracy
• Obtaining confirmations

Reporting

The report requires a description of the purpose along with the agreed-upon procedures in adequate detail for enabling the user of such report to clearly understand the extent and nature of the work performed. The auditor should clearly mention in this report that an audit or a review hasn’t been performed. The report of factual findings must contain:

• Title
• Addressee
• The distinction between particular financial or non-financial information to which agreed-upon procedures are applied by the auditor
• A statement which describes that procedures performed by the auditor are the ones agreed-upon with the recipient
• A statement describing that execution of the engagement was as per SRS relevant to the agreed-upon procedures engagements
• The purpose for which such agreed-upon procedures were executed
• List of the specific procedures executed during the engagement
• Description of the factual findings of the auditor together with appropriate and adequate details of exceptions and errors found
• A statement that the procedures performed do not constitute either an audit or a review and, as such, no assurance is expressed
• A statement describing if the auditor had performed additional procedures, either an audit or a review, other matters could have surfaced which would have been part of such report
• A statement describing that such report is limited to specific parties having agreed to procedures to be performed
• Date of such report
• Place of the signature
• Signature of the auditor

The report must be signed by an accountant in his/her personal name. If a firm is employed, such report must be signed in the personal name of such accountant along with the name of such firm. The proprietor or partner signing such report on agreed-upon procedures is required to provide the membership number which is assigned by ICAI.