Agreed-Upon Procedures Services

Agreed-Upon Procedures (AUPs) Services are professional services provided by the independent auditor. These involve performing predetermined procedures that have been agreed between the auditor and the engaging party, without expressing an opinion or conclusion. The engaging party acknowledges that the procedures to be performed are appropriate for the purpose of the engagement. The auditor illustrates the agreed-upon procedures performed and reports the factual findings concluded. It is the responsibility of the report users to analyze these findings and make decisions based on the same.

Why are Agreed-Upon Procedures important?

The value of Agreed-Upon Procedures lies in providing accurate and reliable findings as the auditor adheres to professional standards, including relevant ethical requirements, as well as presenting the procedures performed and the findings in a clear and objective manner.

What legislation and international standards does the independent auditor adopt in preparing the Agreed-upon Procedures Report?

1. International Standard on Related Services (ISRS) 4400 Agreed-Upon Procedures Engagements
2. Relevant local legislation related to the subject matter of AUPs, particularly the Companies Law No. 1 of 2016 and the Commerce Law No. 68 of 1980

What Are the key examples of Agreed-Upon Procedures Services?

Agreed-Upon Procedures cover any subject matters or areas where these procedures are performed as per the agreement between the concerned parties, including any information, documentation, or performance of requirements or obligations, or reconciliation of transactions.

Below are common examples of Agreed-Upon Procedures services:

1. Incorporation of Companies

   The incorporation of companies is a specialized service intended to assist new companies in establishing a legal entity in compliance with the legal and regulatory requirements in the State of Kuwait. This service is rendered based on specific procedures agreed upon between the auditor and the client, where the auditor manages and implements the incorporation procedures, ensuring that all steps related to the establishment of the company comply with laws, regulations, and the requirements of administrative and regulatory authorities.

2. Voluntary Liquidation of Companies

   Voluntary liquidation is a process through which a company’s business is terminated, its obligations settled, and its net assets distributed to partners or shareholders, based on a resolution made by the shareholders or partners rather than a judicial or administrative order. This process is carried out in accordance with the provisions of Companies Law No. 1 of 2016, as amended, and the applicable regulatory frameworks set by the Ministry of Commerce and Industry and relevant regulatory authorities such as the Central Bank of Kuwait, the Capital Markets Authority, and the Insurance Regulatory Unit, where applicable.

   The auditor manages the voluntary liquidation process starting from appointing the liquidator to completing the liquidation and deregistering the company from the Ministry of Commerce and Industry records.

3. Examination of Specific Account Balances or Classes of Transactions

   The examination is performed according to the agreed-upon procedures to verify the accuracy and correctness of specific accounts or transactions recorded in the entity’s accounting records. This engagement is carried out based on a prior agreement between the auditor and the client or the intended user, specifying the procedures the auditor should follow without expressing an opinion or providing assurance on the entire financial statements.

4. Capital Amendment

   Business entities need to adjust their capital, either by increase or decrease. Companies have many reasons to undertake this process. According to the provisions of the Companies Law No. 1 of 2016, its executive regulations as amended, licensed auditor should be engaged to issue reports related to the capital amendment.

5. Forensic Accounting Reporting

   Forensic accounting, sometimes called investigative or judicial accounting, is an accounting activity that uses accounting and auditing tools and investigative skills to examine, analyze, and prepare objective reports on complex financial data, information, and transactions of individuals and business entities.

   Forensic accounting reports are intended to provide a clear and accurate understanding of the financial information, data or transactions under examination to reveal any evidence of financial crimes or violations, which would assist the judicial authorities in achieving justice in settling disputes.

6. Attestation

   Business entities need the attestation report by an auditor on data or information related to a specific matter in order to comply with the requirements of regulatory or organizational authorities, carry on certain business activities, obtain a license, and meet other business requirements.

   Attestation engagements involve conducting an examination or review, or performing agreed-upon procedures related to subject matter where the auditor is engaged to provide assurance on financial or non-financial information based on predefined criteria. The report preparation is the responsibility of another party.

7. Corporate Conversion

   The term “Corporate Conversion” refers to the process through which an entity converts its legal status from one form to another. The process of corporate conversion in the State of Kuwait is subject to a set of procedures and legal requirements regulating the same under the Companies Law No. 1 of 2016 and its Executive Regulation, as amended. Such requirements shall be entirely met to have the application for conversion approved.

   The engaged auditor shall prepare a net assets valuation report as of the date of conversion pursuant to the following:

   • Article 250 of the Companies Law No. 1 of 2016, as amended.
   • Article 131 of the Executive Regulation of the Companies Law No. 1 of 2016, as amended.

   The company applying for conversion shall complete all conversion procedures within maximum six months from the filing date of the application. If the conversion procedures aren’t completed within this period, the application shall be deemed null and void.

8. Verification of Compliance with Project Contracts

   Verification is performed according to Agreed-Upon Procedures to ensure that projects are being executed in accordance with the terms and conditions stated in the contracts between the parties involved. The auditor performs specific procedures, including reviewing the contract and its stipulations, examining the implementation of project phases, inspecting a sample of project files, and deriving factual results in this regard.

9. Corporate Support Services

   Corporate Support Services encompass a wide range of professional services designed to assist companies in operating more efficiently and achieving their strategic objectives. These services provide administrative, operational, and strategic support that enables businesses to focus on their core functions while ensuring that all auxiliary tasks are handled effectively through scalable solutions that meet the evolving needs of the business environment.

10. Accounting Consulting Services

    Accounting consulting services involve providing professional advice to companies and individuals in financial and accounting areas. These services aim to enhance operational efficiency and ensure compliance with legal requirements and international standards.

    Accounting consulting services include areas such as the application of International Financial Reporting Standards (IFRS Applications), chart of accounts design, convert cash basis to accrual basis, accounting automation software selection, fixed assets inventory, goods inventory, and cost systems design.

What is the Added Value of Agreed-Upon Procedures for Business Entities?

1. Obtain objective and reliable findings to assist business entity’s management in making informed decisions.
2. Help the parties to disputes reach mutual understanding and arrangements.
3. Issue independent reports to clients, enabling them to present their viewpoints before the judiciary.
4. Assist business entities with detecting misappropriations, frauds, and other breaches.
5. Enhance confidence of investors, shareholders, and lenders by providing accurate and unbiased information.

What are the Services offered by Baker Tilly Kuwait?

1. Incorporation of companies
2. Voluntary liquidation of companies
3. Examination of specific account balances or classes of transactions
4. Capital amendment
5. Forensic Accounting Reporting
6. Attestation
7. Corporate conversion
8. Verification of compliance with project contracts
9. Corporate support services
10. Accounting consulting services

Why Baker Tilly?

1. Baker Tilly in Kuwait is a member of Baker Tilly International network based in the UK, ranked amongst the top 10 global accounting networks.
2. Auditors in Baker Tilly Kuwait are licensed by Ministry of Commerce and Industry and are registered with the regulatory authorities, e.g., Central Bank of Kuwait, Capital Markets Authority and Insurance Regulatory Unit.
3. Extensive experience in providing agreed-upon procedures (AUPs) and other related services to companies operating across various business sectors in the State of Kuwait.
4. Highly experienced bilingual team with specialized academic qualifications and professional certifications.
5. Commitment to performing AUPs and other related services engagements according to predefined timelines, with no delays and responsiveness to client requirements.