AUP and Special Purpose Engagements for Telangana Subsidiaries, Franchisees and Grantees

Agreed-upon procedures and special purpose audits are niche tools, but in Telangana they come up often, because of the kind of businesses the state hosts. This guide looks at the three most common situations: subsidiaries of foreign groups, franchise businesses, and organisations receiving grants.

Subsidiaries of Foreign Groups

Hyderabad hosts a large number of global capability centres and other Indian subsidiaries of foreign companies. Their parents frequently ask for:

• Agreed-upon procedures on specific areas, like payroll, vendor payments or fixed assets, as part of group internal control programmes.
• Audits of reporting packages prepared under the group's accounting manual, to support group consolidation.
• Checks on cost-plus billing, confirming that costs charged to the parent follow the intercompany agreement.

These are separate from the Indian statutory audit, and often run on the parent's timetable rather than India's financial year.

Franchise Businesses

Hyderabad's large restaurant, retail, education and services sector includes many franchisees of national and international brands. Franchise agreements often require:

• Periodic verification of reported sales, since royalties and fees are based on them.
• Checks on compliance with the franchise's financial reporting requirements.

AUP engagements are usually the most efficient way to meet these, with procedures agreed with the franchisor.

Grant and CSR Recipients

NGOs, research institutions and startups in Telangana receive funding from government schemes, CSR programmes and institutional donors. Funders commonly ask for:

• Utilisation certificates confirming how funds were spent.
• Audits of grant statements prepared under the grant agreement.
• Agreed-upon procedures on specific expenditure categories.

Choosing the Right Engagement

• If the requesting party needs an opinion, a special purpose audit.
• If they need specific checks, an AUP engagement.
• If they need a standard certificate, like utilisation, the certification route.

A Checklist

1. Get the exact requirement in writing from the parent, franchisor or funder.
2. Agree the engagement type and procedures early.
3. Keep records organised in the categories the report will use.
4. Plan around the requesting party's deadlines.

Getting Help

Think Filing performs AUP engagements, special purpose audits and certifications for Telangana subsidiaries, franchisees and grant recipients.