What Are Agreed-Upon Procedures (AUP) and How Do They Work in Kenya?

Quick Advisory: Agreed-Upon Procedures (AUP) are targeted financial reviews where an auditor performs specific procedures agreed upon by the client and reports factual findings—without giving an audit opinion. In Kenya, AUP engagements are ideal when investors need verification of specific financial metrics without the cost or scope of a full statutory audit.

Agreed-Upon Procedures (AUP) engagements are a specialized form of assurance service governed by international standards such as ISRS 4400. Unlike statutory audits, which provide an overall opinion on financial statements, AUP engagements are highly customized. The client, auditor, and often a third party (such as an investor or lender) agree in advance on the exact procedures to be performed.

For example, an investor may want verification of:

• Revenue figures for the last 12 months
• Specific expense categories (e.g., procurement or payroll)
• Cash balances or receivables

The auditor then performs these procedures and issues a report detailing factual findings—without interpretation or assurance conclusions. This makes AUP highly flexible and cost-effective.

To understand how AUP compares to traditional audits, explore our detailed Audit and Assurance Services offering.

Why Are AUP Engagements Critical for Kenyan Businesses in 2026?

Quick Advisory: AUP services are essential in 2026 due to stricter KRA compliance, increased investor scrutiny, and the need for rapid financial validation. They provide a faster, more focused alternative to audits—particularly for startups, SMEs, and investment-ready companies.

Kenya’s financial and regulatory environment has evolved significantly. Several factors are driving the demand for AUP engagements:

1. eTIMS Compliance and Expense Validation

From January 1, 2026, the Kenya Revenue Authority (KRA) requires that expenses must be supported by eTIMS-compliant invoices to be tax deductible. This has created an urgent need for targeted verification of expense records.

AUP allows businesses to:

• Validate expense compliance with eTIMS
• Identify non-compliant transactions early
• Prepare for potential KRA audits

For deeper tax compliance strategies, visit our Tax Compliance Advisory Services.

2. Increased Investor Due Diligence

Private equity firms, venture capitalists, and lenders now demand granular financial verification before committing funds. AUP provides a practical solution by focusing on specific risk areas rather than reviewing entire financial statements.

3. Cost Sensitivity Among SMEs

Many Kenyan SMEs do not require full audits but still need credible financial validation. AUP offers a scalable, affordable alternative.

4. Faster Turnaround for Transactions

In mergers, acquisitions, and funding rounds, time is critical. AUP engagements can be completed much faster than statutory audits, enabling quicker decision-making.

What Specific Financial Areas Can AUP Cover?

Quick Advisory: AUP engagements can be tailored to verify any financial data point—from revenue and expenses to payroll and compliance metrics. This flexibility makes AUP ideal for investor-specific concerns or high-risk areas.

AUP engagements are not limited to financial statements. They can focus on specific operational or compliance areas such as:

Revenue Verification

• Confirming sales figures against invoices and bank deposits
• Identifying revenue recognition inconsistencies

Expense Validation (eTIMS Focus)

• Matching expenses to eTIMS-generated invoices
• Detecting unsupported or disallowed expenses

Payroll and Staff Costs

• Verifying payroll accuracy and PAYE compliance
• Cross-checking employee records

Learn more about accurate payroll systems through our Payroll Services.

Cash and Bank Balances

• Confirming bank reconciliations
• Identifying unusual transactions

Accounts Receivable and Payable

• Validating outstanding balances
• Assessing collectability risks

For businesses needing ongoing financial structure, our Bookkeeping Services provide foundational support.

How Does AUP Differ from a Statutory Audit?

Quick Advisory: AUP does not provide an audit opinion—it only reports factual findings based on agreed procedures. It is narrower in scope, faster to complete, and more cost-effective than a statutory audit.

If you’re considering whether your business requires a full audit, read our Statutory Audit Kenya Guide.

What Are the Key Benefits of AUP for Investors and CEOs?

Quick Advisory: AUP delivers targeted assurance, faster insights, and cost efficiency—making it a powerful tool for investor decision-making. It bridges the gap between internal reports and full audits.

1. Targeted Risk Assessment

Investors can focus on specific financial risks instead of reviewing entire financial statements.

2. Faster Decision-Making

AUP reports are delivered quickly, enabling timely investment or lending decisions.

3. Cost Efficiency

Companies only pay for the procedures they need, avoiding unnecessary audit costs.

4. Enhanced Transparency

Provides independent verification, increasing trust between stakeholders.

5. Regulatory Preparedness

Helps businesses identify compliance gaps before regulatory scrutiny.

When Should a Business Choose AUP Instead of a Full Audit?

Quick Advisory: Choose AUP when you need verification of specific financial data rather than a full audit opinion. It is ideal for pre-investment checks, internal investigations, and compliance reviews.

Common scenarios include:

• Pre-investment due diligence
• Loan applications
• Internal fraud investigations
• KRA audit preparation
• Partner or shareholder disputes

For strategic financial oversight, explore our CFO Advisory Services.

Adamjee Advisory Insights: 2026 Regulatory Landscape

Quick Advisory: In 2026, compliance is data-driven, automated, and heavily enforced by KRA systems like eTIMS. AUP helps businesses stay ahead by proactively validating financial data.

eTIMS Enforcement

KRA’s eTIMS system now plays a central role in tax compliance. Expenses without valid eTIMS invoices are disallowed, increasing the importance of transaction-level verification.

Finance Act 2025 Impact

The Finance Act 2025 introduced stricter reporting requirements and increased penalties for non-compliance, especially for SMEs.

KRA Automated Payment Plan (APP)

Businesses facing tax liabilities can now leverage the KRA Automated Payment Plan (APP) to manage obligations. However, accurate financial data is essential to qualify—making AUP a valuable preparatory tool.

Global Standards via SFAI Network

As a member of SFAI Global, Adamjee Auditors applies international best practices while maintaining deep local expertise—ensuring compliance with IFRS and Kenyan regulations.

How Can AUP Strengthen Investor Relations?

Quick Advisory: AUP builds investor confidence by providing independent, verifiable financial data. It demonstrates transparency and readiness for funding or partnerships.

In today’s competitive investment landscape, trust is everything. AUP reports:

• Reduce information asymmetry
• Provide credible third-party validation
• Enhance negotiation positioning

For businesses seeking structured governance, our Company Secretarial Services can further strengthen compliance.

How to Get Started with AUP in Kenya

Quick Advisory: Start by identifying the specific financial areas you want verified, then engage a qualified assurance provider to design the procedures. Clarity in scope ensures maximum value from the engagement.

Step 1: Define Objectives

Determine what investors or stakeholders need to verify.

Step 2: Agree on Procedures

Work with auditors to define specific tests and checks.

Step 3: Execute Engagement

Auditors perform procedures and document findings.

Step 4: Review Findings

Use the report to make informed decisions.

To begin your AUP engagement, contact our expert team today.

Why Choose Adamjee Auditors for AUP Services?

Quick Advisory: Adamjee Auditors combines local regulatory expertise with global standards through the SFAI network. We deliver precise, investor-focused AUP engagements tailored to your business needs.

At Adamjee Auditors, we offer:

• Deep expertise in Kenyan tax and regulatory frameworks
• Proven experience in investor-focused engagements
• Access to global best practices through SFAI Global

Learn more about our firm on our About Us page or explore insights in our Knowledge Base.

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Gain Clarity and Confidence in Your Finances
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Schedule a consultation with our expert team in Nairobi or Mombasa to discuss your business needs.

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 +254 717 908 241
madamjee@adamjeeauditors.co.ke

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