Agreed-Upon Procedures: Precision for Donor-Funded Projects
Clearly defined procedures and factual findings can strengthen accountability without overstating the nature of the engagement.
The value of an agreed-upon procedures engagement depends on the precision of its scope.
Donors, implementing partners, and project management teams frequently require focused professional work over particular expenditures, procurement processes, payroll costs, assets, or funding conditions.
A full financial statement audit may extend beyond the matter requiring attention. An informal internal review, however, may not provide the required structure, objectivity, or documented reporting.
In these circumstances, an agreed-upon procedures engagement can provide a focused and transparent response.
What the Engagement Actually Provides
Under an agreed-upon procedures engagement, the practitioner performs procedures that have been agreed in advance and reports the factual findings arising from those procedures.
The practitioner does not express an audit opinion or assurance conclusion. Users consider the findings and draw their own conclusions based on their knowledge of the project, funding agreement, and reporting requirement.
ISRS 4400 (Revised) responds to the growing use of agreed-upon procedures by regulators, funding bodies, creditors, and other stakeholders, particularly where accountability over grants and funding is required.
This distinction is central. The value of the engagement comes from precision and transparency, not from presenting it as a form of assurance that it does not provide.
Procedures Must Be Capable of Objective Reporting
A broad instruction such as “verify project expenditure” is unlikely to provide an adequate basis for a well-defined engagement. Different parties may interpret the instruction differently, leading to uncertainty over what was tested and what the report means.
More effective procedures specify:
- The transactions or population to be examined.
- The reporting period.
- The applicable agreement or criteria.
- The documents to be inspected.
- The comparison, recalculation, confirmation, or reconciliation to be performed.
- The manner in which exceptions will be reported.
For example, the practitioner may agree selected expenditure to invoices and payment records, recalculate payroll costs, inspect procurement approvals, confirm the existence of funded assets, or compare reported expenditure with eligible cost provisions.
Responsibilities Must Remain Clear
Management remains responsible for project implementation, compliance with funding terms, maintaining records, and providing complete and accurate information.
The practitioner is responsible for performing the agreed procedures and reporting the resulting findings accurately. The practitioner is not responsible for determining whether the agreed procedures are sufficient for every possible user or purpose.
Where users have different information needs, those differences should be resolved before the engagement begins.
Stronger Accountability Through Better Scoping
The effectiveness of an agreed-upon procedures engagement depends less on the number of procedures than on how precisely they are designed.
A carefully scoped engagement allows users to understand exactly what was examined, what was found, and what remains outside the scope. This reduces ambiguity and helps prevent the report from being interpreted as providing broader assurance.
For donor-funded projects operating in complex or documentation-intensive environments, that clarity can improve accountability, support corrective action, and enable focused oversight without commissioning work that extends beyond the actual requirement.