An agreed-upon procedure is a standard a company or client outlines when it hires an external party to perform an audit on a specific test or business process. The procedures, which are called audit standards, are designed and agreed upon by the entity conducting the audit, as well as any appropriate third parties.
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The auditor's report on the findings is usually restricted to those parties who developed the agreed-upon procedures because of the specificity of the desired results. For example, agreed-upon procedures may be developed by one entity that is considering purchasing another business. The purchasing entity would likely develop the agreed-upon procedures to help determine specific monetary or other information about the business it may acquire.
In an audit conducted under agreed-upon procedures, the auditor provides only factual findings and does not offer opinions, conclusions or assurances in the final report. Instead, the auditor's report simply presents the facts, with the audit facilitators drawing their own conclusions from the findings.