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Key’s management agrees that an AUP engage- providers for every 10 children up to age 3, Key
ment will meet its needs. Although not required, requires three providers for every eight children in
because of the nature of the engagement, Jones this age group. Key concurrently began receiving
advises Key’s management that Jones’s report will requests from current and prospective customers
include an alert advising readers that it is intended and from regulators to provide a report on the
solely for the information and use of Key’s manage- accuracy of its advertising. Key’s management and
ment and is not intended to be and should not be Jones discussed alternative services to address these
used by anyone other than Key’s management. The issues, which included:
expected restriction on the use of Jones’s report is ■ A general-use agreed-upon procedures report;
noted in the engagement letter. ■ An assertion-based examination engagement; or
As the engagement progresses, Jones frequently ■ A review engagement.
meets with Key’s management to discuss the nature, Jones explains each service to help Key decide
timing, and extent of the procedures that Jones which service to use. Jones notes that a direct
has performed or is planning to perform. Near examination cannot be used for compliance
the completion of the engagement, and before the with regulations.
issuance of Jones’s AUP report, Jones asks Key to
sign the representation letter that includes Key’s AGREED-UPON PROCEDURES ENGAGEMENT
agreement and acknowledgment that the proce- Jones informs Jane Key that the use of the AUP
dures performed are appropriate for the purpose of report need not be restricted; Key could provide
assisting Key in determining whether Key’s systems an unrestricted report to regulators and to
and controls are being followed. current and potential customers. Jones inquires
Jones’s report includes the policies and whether Key believes that the intended users of
procedures established by Key’s management, the report should agree to and acknowledge that
the procedures performed by Jones, and Jones’s the procedures performed are appropriate for
findings. See the chart, “Jones’s Report,” for their purposes. If Key believes that agreement
an excerpt. and acknowledgment will help users find value in
Jones also may separately suggest improve- the report, Jones advises that Key’s management,
ments to Key’s procedures, especially where the as part of its agreement to and acknowledg-
legal requirements were not always met. ment of the appropriateness of the procedures
performed, should communicate with each of
YEAR 2 the required intended users to confirm that they
In 2021, Key’s business grew; it advertised that agree to and acknowledge that the procedures
its policies and procedures exceed those required performed are appropriate for their purposes.
by laws and regulations and that those policies The representation letter will include a statement
and procedures were implemented. For example, that Key’s management has so confirmed with
although the regulations called for two child care the intended users of Jones’s AUP report. If

Jones’s report

Requirement Procedure Findings
Background checks on all child care providers are Randomly select 10 child care Key performed a background check
performed before the provider begins work at providers employed during the year. for all selected child care providers;
Key. Inspect the background check in however, Key performed the
their personnel files. Agree that the background check for one child care
background check was performed provider two months after she began
before the provider started work. work.
Management of Key maintains liability insurance Inspect the insurance policy. Confirm We inspected the policy from XYZ
of at least $1,000,000 for the entire year. the coverage amount and whether insurance company and noted
the policy was in effect the entire the coverage was for $1,000,000;
year with the insurance company. we received confirmation of the
coverage amount and that the policy
was in effect the entire year from the
insurance company.

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