A practical guide to Agreed-Upon Procedures (AUPs)
Just because you don’t need a 401(k) plan audit doesn’t mean you shouldn’t still protect your employees and organization.
That’s where Agreed-Upon Procedures (AUPs) come in—a customizable, cost-effective alternative to a full-blown audit, designed to give you peace of mind without the extra regulatory paperwork. Think of them as the “choose your own adventure” of audit services: you tell us what areas you want to examine, and we’ll perform targeted testing to help you spot (and fix) potential issues early.
In other words, you don’t need an audit to be proactive.
So… what are Agreed-Upon Procedures, exactly?
Agreed-Upon Procedures engagements are a type of plan check-up. Instead of combing through your plan as we would during an audit, we work with you to define specific areas of focus—things like:
- Participant eligibility and enrollment
- Timeliness of employee deferrals
- Employer match calculations
- Hardship or loan distributions
- Plan document compliance
… Basically, anywhere you think an outside eye would be helpful. Then we perform testing based in the area that you selected and provide you with a detailed report of our findings—no official opinion or certification, just facts and transparency.
It’s like a health screening for your plan: targeted, informative, and designed to catch problems before they snowball into full-blown emergencies (or trigger a surprise IRS or DOL examination).
Why AUPs matter—even if you’re exempt from a formal audit
If your 401(k) plan has fewer than 100+ participants with balances, you’re probably not required to undergo an annual audit.
But that doesn’t mean problems can’t slip through the cracks. We’ve seen:
- Late deposits that go unnoticed until penalties pile up
- Confusing eligibility rules that result in missed enrollments
- Incorrect match formulas that leave your team short-changed
These issues can be costly—both financially and reputationally. AUPs help you identify those risks early and course-correct before they escalate.
They’re also a great tool for:
- New plan sponsors who want to validate that their setup and processes are working correctly
- Companies experiencing rapid growth and preparing to cross the 100-participant audit threshold
- Organizations that recently changed payroll providers or plan administrators and want to double-check everything transferred correctly
If you’ve had any change, growth, or gut-level unease about your plan processes, an AUP might be exactly what you need.
Agreed-Upon Procedures vs. audits: A side-by-side comparison
| Audit | Agreed-Upon Procedure | |
| Required? | Yes, if you have 100+ participants with balances | No, entirely optional |
| What it covers | A deep dive into procedures, controls, processes and transactions in all significant areas. | You choose the areas to examine |
| Opinion issued? | Yes | No |
| Usefulness | Ensures full compliance | Highlights key risks and red flags |
| Cost | Higher | Lower |
An audit is the full diagnostic work-up. An AUP is more like a tune-up: less intensive, more flexible, and focused on what you care about most.
You don’t need an audit to protect your plan
AUPs provide a way to stay proactive, catch mistakes early, and build confidence in your plan operations. Whether you’re looking for a quick pulse check or a deeper dive into something that doesn’t feel right, we can help tailor a review that fits your needs.
Let’s make sure your plan is doing right by your employees—and by you.
Learn more about Agreed-Upon Procedures and how they might support your organization. Contact your friendly neighborhood auditor today.
Photo by Andrea Piacquadio.
