Field Notes · 3 November 2025
What Changes When Your Lender Requests Agreed-Upon Procedures
A plain walkthrough of how AUP differs from an audit opinion when a Japanese bank asks for covenant confirmation.
Facility agreements sometimes require an independent accountant to test a short list of figures — inventory valuation method, receivable ageing buckets, or interest-coverage arithmetic — without asking for a full audit.
Factual findings, not an opinion
In an agreed-upon procedures engagement, Coral Bay performs only the tests named in the letter and reports what we found. We do not conclude whether the financial statements as a whole are fairly presented.
Write the procedures carefully
Vague requests such as “check inventory” create delay. Prefer language like “recalculate the year-end inventory provision using the ageing categories in Schedule 4 of the facility agreement and compare to the general ledger balance.”
Timing relative to the audit
AUP work can sit between statutory audits when a waiver or drawdown is pending. If we already audit the company, we still maintain a separate engagement letter so independence and scope stay clear.