Agreed-Upon Procedures Regarding Internal Control over Financial Reporting

Section 9110

Agreed-Upon Procedures Regarding Internal Control over Financial Reporting

Section 9110

Section 9110
  • The purpose of this engagement is solely to assist those charged with governance, those having oversight responsibility for the financial reporting process, or management in assessing the design, implementation or operating effectiveness of the entity’s internal control over financial reporting
    • This Section does not apply to engagements to report on an entity’s internal control over financial reporting to external parties who are not in a position to determine whether the agreed-upon procedures are sufficient and appropriate (such engagements should be done in accordance with section 5025)
  • No assurance or opinion is provided on the design, implementation or operating effectiveness of the entity’s internal control over financial reporting
  • Only perform procedures requested by the client
  • The public accountant and assistants should have adequate technical training and proficiency
  • Ensure that:
    • The engagement is adequately planned
    • The engagement is conducted and the report of findings prepared with due care and with an objective state of mind
    • The assistants employed on the engagement are properly supervised
  • The procedures specified by the client cannot be overly subjective; the agreed-upon procedures should result in observable outcomes such that if another accountant reperformed the procedures, they would observe similar outcomes
    • Subjective procedure = test the purchase invoices for authorization
    • Good procedure = select 25 random purchase invoices from the current fiscal period, and report whether the invoice contains a signature from the purchase manager
    • Tip: avoid using general terms like: review, check, interview or test
  • The engagement letter should have the following:
    • A description of the procedures to be performed and the timing and extent of those procedures
    • Details regarding the period of time, or the point in time, to which the agreed-upon procedures are to be applied
    • A statement that the client is responsible for determining the suitability and sufficiency of the agreed-upon procedures, and that the public accountant accepts no responsibility
  • In the engagement report document the procedures performed, and the results
  • The engagement report should not include:
    • Views or conclusions regarding whether findings represent deficiencies in internal control over financial reporting
    • Recommendations for addressing findings that may indicate deficiencies in internal control over financial reporting
    • A positive or negative assurance

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