Agreed Upon Procedures (AUP)

This is a process of applying specific procedures to an area of a financial statement or within a specific accounting cycle. In Puerto Rico, AUP have become a required service (unless an audit is performed), for tax filing purposes, in order to deduct certain expenses for purposes of the Alternative Minimum Tax (Corporations) or Alternate Basic Tax (Individuals) as required by Circular Letter No. 19-14 issued by “Hacienda”. This is applicable to taxpayers with revenues under $3,000,000 for the year. Also, Circular Letter No. 20-39 establishes a more robust AUP when revenues for the year are equal or greater than $3,000,000 but less than $10,000,000.

AUP services might also be needed when:
-Performing due diligence when buying, selling, or merging a business
-Required in the loan agreement for loan covenants
-Inventory balances need to be confirmed
-Revenue and accounts receivable balances need to be confirmed
-As part of royalty agreements