Agreed Upon Procedures (AUP) is an examination method employed within the scope of financial audits or reviews. In the realms of business and finance, the utilization of AUP has become a common practice to ensure transparency and accountability in financial reports. In this article, TGS AU Partners will provide an understanding of the Agreed Upon Procedures concept and its application as a solution to intra-group service transaction issues.

Intra-Group Service Transactions Issues in International Companies

Referring to SE-50/PJ/2013, intra-group services are defined as activities provided by one party within a business group that benefits one or more members of its business group. These services include management, administrative, technical, support, procurement, distribution, and other commercial services.


In assessing the reasonableness of intra-group service transactions, two aspects can be considered. The first aspect relates to proving the existence and benefits of the services provided to related parties. Once the first aspect is verified, the second aspect is determining the reasonableness of the value of the service remuneration.


The main issue in tax examinations in Indonesia itself revolves around the first aspect, i.e., testing the existence and benefits of intra-group service transactions. Concerning the examination of these services, there is a conflict between using indirect methods and requests for evidence based on a single-service basis from tax authorities.


To address this issue, one can use evidence or information from third-party opinions. Through external assurance by an independent auditor, you can obtain an audit opinion on a financial report to state that the examination has been conducted in accordance with standards along with opinions on the reasonableness of financial reports.

Agreed Upon Procedures as a Solution to Intra-Group Service Transaction Issues

In addressing intra-group service transaction issues, one instrument that can be used for examining the reasonableness of transactions based on factual data by external parties is Agreed Upon Procedures (AUP). Agreed Upon Procedures is a method of examination typically used by an auditor or other independent parties. This method is applied to evaluate and examine specific information or activities in accordance with procedures agreed upon by all involved parties beforehand.


As stipulated in the International Standard on Related Services 4400 (ISRS 4400), an AUP report must include the following six components:

  1. Identification of financial and non-financial information to be discussed.

  2. Purpose of the relevant AUP.

  3. Procedures used.

  4. Factual findings.

  5. Specific transactions examined.

  6. A statement that the AUP has been prepared in accordance with the standards set by ISRS.


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In the AUP preparation process, auditors must adhere to the professional ethics code issued by the International Ethics Standards Board for Accountants (IESBA). With this standardization, the AUP report can explain the actual conditions of cost allocation methods and the authenticity of cost distribution from each entity involved in intra-group service transactions.


It's crucial to underline that auditors do not provide opinions or conclusions on the overall financial statements or entities' compliance with regulations. They only present findings based on agreed-upon procedures. This provides flexibility and clarity in assessing specific aspects crucial for the involved parties.


Agreed Upon Procedures (AUP) is a method used to ensure transparency, accuracy, and better risk management. This method can be a solution in assessing the reasonableness of intra-group service transactions through examinations conducted by independent auditors.


An AUP report from an independent auditor can complement transfer pricing documentation for intra-group service transactions within a company. With adequate documentation, the potential for disputes in the future can be minimized due to the taxpayer's efforts to reduce risks.

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