—Audit & Assurance
Special Purpose & Agreed-Upon Procedures (AUP) Engagements
Audits and reviews for a specific purpose such as grants, project costing, royalty verification or lender requirements.
Handled by a practising Chartered Accountant or Company Secretary.
Scope of work
Audits and reviews for a specific purpose such as grants, project costing, royalty verification or lender requirements.
Key deliverables
- AUP / special-purpose report
Governing law
SRS 4400; SAs
Frequency
As required
REGISTRATION ONLY
Special Purpose & Agreed-Upon Procedures (AUP) Engagements
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- AUP / special-purpose report
REGISTRATION + COMPLIANCE CARE
Special Purpose & Agreed-Upon Procedures (AUP) Engagements + Compliance Care
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+ ₹9,599/yr for year-one ROC compliance
- AUP / special-purpose report
- Financial statements in Schedule III format
- Board report and AGM notice
- Filed AOC-4 with SRN
- Filed MGT-7 / MGT-7A with SRN
- Board and AGM minutes
500+
Companies incorporated
100%
CA/CS-signed filings
4.8/5
Founder rating
—A closer look
Understanding special purpose and AUP engagements
Everything below is written for businesses, parent companies, and lenders — what special purpose audits and agreed-upon procedures are, and when each is the right tool.
What are special purpose and AUP engagements?
Not every assurance need fits the annual statutory audit. A special purpose audit examines financial information prepared for a specific use — like a grant, a contract, a regulator, or a parent company's reporting — under the framework that use requires. An agreed-upon procedures (AUP) engagement is different: the accountant performs specific procedures agreed with the client and reports the factual findings, without giving an opinion.
These engagements are common when a parent company, donor, franchisor, lender, or counterparty needs independent comfort on something specific, quickly, without a full audit.
The key terms
A few terms distinguish these engagements:
- Agreed-upon procedures
- Specific procedures agreed in advance, like checking a sample of invoices or recalculating a royalty, with a report of factual findings.
- SRS 4400
- The ICAI standard governing agreed-upon procedures engagements.
- No opinion
- An AUP report doesn't give assurance or an opinion. Users draw their own conclusions from the findings.
- Special purpose framework
- A basis of preparation designed for a particular user, like a contract's definitions or a parent's reporting rules.
- SA 800 and SA 805
- Standards for auditing special purpose financial statements and single statements or specific elements.
- Restricted use
- Reports are usually restricted to the parties who agreed the procedures or need the information.
- Engagement letter
- Sets out exactly what will be done and reported, which is especially important for AUP.
A simple example
A Hyderabad franchisee of an international restaurant brand must confirm its reported sales each year, because royalties are based on them. The franchisor asks for an AUP engagement: the accountant agrees point-of-sale reports to the books and bank deposits for sampled months, recalculates the royalty, and reports any differences. No opinion is given. The franchisor reads the findings and settles the royalty. It's faster and cheaper than a full audit, and gives the franchisor exactly the comfort it needs.
Why it matters
The right engagement gives the right comfort at the right cost:
- Targeted
- Procedures focus on exactly what the user cares about, not the whole set of accounts.
- Faster
- A narrow scope means a shorter engagement than a full audit.
- Contractual requirements
- Franchise, licensing, grant, and loan agreements often require independent verification.
- Parent company needs
- Foreign parents often need specific procedures on Indian subsidiaries for group purposes.
- Clarity about what's covered
- The engagement letter sets out exactly what's done, so no one over-relies on it.
- Standards-based
- Engagements follow ICAI standards, so the work and report are recognised.
- Flexible
- Scope can be adjusted to the risk and the user's needs.
Who is this for?
- Indian subsidiaries asked by a parent for specific procedures
- Franchisees and licensees verifying sales or royalties
- Grant and CSR recipients reporting to funders
- Businesses needing verification under a contract or loan covenant
- Companies needing an audit of a single statement or element
Standard certificates — net worth, turnover, utilisation, Form 15CB, and bank or regulator certificates — are covered by our certification services.
AUP vs. special purpose audit vs. statutory audit
They give different levels of comfort:
| Aspect | Agreed-upon procedures | Special purpose audit | Statutory audit |
|---|---|---|---|
| Assurance | None — factual findings only | Reasonable assurance, with an opinion | Reasonable assurance, with an opinion |
| Scope | Procedures agreed with the user | Specific statements or elements, under a special purpose framework | Complete financial statements |
| Standard | SRS 4400 | SA 800 / SA 805 | Standards on Auditing |
| Report use | Restricted to agreed parties | Often restricted | Public, filed with the ROC |
| Typical use | Royalty checks, sample testing, parent requests | Grant statements, contract-specific accounts | Annual accounts |
What we'll need from you
- The request
- The letter or clause from the parent, funder, franchisor, or lender setting out what's needed.
- The information
- The statement, schedule, or data the procedures relate to.
- Source records
- Books, invoices, bank statements, and system reports for testing.
- The framework
- For special purpose audits, the basis of preparation — a contract or reporting manual.
- Timeline
- When the report is due and to whom.
- Contact person
- Someone who can answer questions about the data.
Fees depend on the procedures, sample sizes, and deadline.
How these engagements work
Engagements follow a clear sequence:
- 1
Understand the need
We review the request and agree whether AUP or a special purpose audit fits.
- 2
Agree the procedures
For AUP, the specific procedures, samples, and reporting are agreed with you and, where needed, the user.
- 3
Engagement letter
Terms are documented, including restrictions on use of the report.
- 4
Perform the work
Procedures or audit work are carried out on the records.
- 5
Discuss findings
Exceptions and differences are discussed with you.
- 6
Report
We issue the report of factual findings or the special purpose audit report.
After the report
A few things follow:
- Share as agreed
- Share the report only with the parties it's intended for.
- Resolve exceptions
- Deal with any differences found, like a royalty shortfall or a data error.
- Fix the source
- Correct the process that caused exceptions, so they don't recur.
- Plan recurring work
- Many requests are annual or quarterly. Keeping the data ready saves time.
- Keep records
- Retain the report and supporting data in case of later questions.
- Review the contract
- Check whether future requirements can be streamlined.
Benefits and responsibilities
Benefits
- The right type of engagement for the need
- Faster and more focused than a full audit
- Reports that meet contractual and parent requirements
- Clear, factual findings
- Work performed under ICAI standards
Responsibilities
- Share the exact request and its source
- Provide the information and records
- Agree procedures before work starts
- Use the report only for its intended purpose
- Resolve exceptions found
- Plan for recurring requirements
—FAQ
Questions businesses actually ask us
An audit gives an opinion with reasonable assurance. An AUP engagement gives no opinion — the accountant performs agreed procedures and reports what was found, and the user draws their own conclusions.