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!7 <br />Smith ~ Gesteland Article <br />Agreed-Upon Procedures - An Alternative to an Audit <br />Keith Baumgartner, CPA, Director of Assurance Services <br />Does your banker, secured creditor, or some other interested party require your <br />business to have an audit? Agreed-upon procedures in conjunction with a review <br />or compilation could be a money- and time-saving alternative to a complete <br />financial statement audit, <br />Agreed-upon procedures applied to specified elements, accounts, or other items <br />of a financial statement provide specific findings regarding important account <br />balances. Examples of potential users of these reports could include financial <br />institutions lending funds under a line of credit agreement secured by trade <br />receivables, purchasers of specific groups of assets, or lessors whose lease <br />income is dependent on lessee sales, If your business is required to have an <br />audit to verify certain account balances an your financial statements, you should <br />discuss the agreed-upon procedure option with the interested parties, <br />To perform agreed-upon procedures, all parties involved obtain a clear <br />understanding of the specific elements, accounts, or items to which the <br />procedures will be applied. The primary accounts tested may include cash, <br />accounts receivable, investments, inventory, fixed assets, accounts payable, <br />sales, etc, The parties then determine the appropriate procedures to be applied. <br />These procedures may include clerical testing, confirmations, observations, <br />analytical review, cutoff testing, costing methods, and reconciliations among <br />others, The procedures are then performed, and the specific findings identified <br />are communicated in a report to the parties involved, These reports will give <br />interested parties a measure of assurance on specific areas of importance <br />without the cast of a complete audit, <br />