For the purposes of this Guidance Statement, the following items have the meanings attributed below:
Assurance engagement means an engagement in which an assurance practitioner aims to obtain sufficient appropriate evidence in order to express a conclusion designed to enhance the degree of confidence of the intended users other than the responsible party about the subject matter information (that is, the outcome of the measurement or evaluation of an underlying subject matter against criteria).
Engagement risk means the risk that the assurance practitioner expresses an inappropriate conclusion when the subject matter information is materially misstated.
Internal control encompasses the following components:
- the control environment;
- the life company’s risk assessment process;
- information systems, including the related business processes, relevant to financial and prudential reporting, and communication;
- control activities; and
- monitoring of controls.
The way in which internal control is designed and implemented varies depending on the life company’s size and complexity.
Life company means all life companies (including friendly societies) registered under section 21 of the Life Act.
Life company auditable annual return(s), means a form used for the collection and reporting of information in relation to a life company, as required to be provided to APRA by a life company in accordance with APRA Reporting Standards made under the FSCODA.
Limited assurance engagement means an assurance engagement in which the assurance practitioner reduces engagement risk to a level that is acceptable in the circumstances of the engagement but where that risk is greater than for a reasonable assurance engagement as the basis for expressing a conclusion in a form that conveys whether, based on the procedures performed and evidence obtained, a matter(s) has come to the assurance practitioner’s attention to cause the assurance practitioner to believe the subject matter information is materially misstated. The nature, timing, and extent of procedures performed in a limited assurance engagement is limited compared with that necessary in a reasonable assurance engagement but is planned to obtain a level of assurance that is, in the assurance practitioner’s professional judgement, meaningful. To be meaningful, the level of assurance obtained by the assurance practitioner is likely to enhance the intended users’ confidence about the subject matter information to a degree that is clearly more than inconsequential.
Prudential Requirements, are defined in LPS 001 and include requirements imposed by:
- the Life Act;
- Regulations (made under the Life Act);
- APRA Prudential Standards (made under the Life Act);
- the FSCODA;
- APRA Reporting Standards (made under the FSCODA);
- APRA conditions on the registration of a life company; and
- any other requirements imposed by APRA, in writing, in relation to the life company.
Reasonable assurance engagement means an assurance engagement in which the assurance practitioner reduces engagement risk to an acceptably low level in the circumstances of the engagement as the basis for the assurance practitioner’s conclusion. The assurance practitioner’s conclusion is expressed in a form that conveys the assurance practitioner’s opinion on the outcome of the measurement or evaluation of the underlying subject matter against criteria.
Reliability under the Australian Accounting Standards Board’s Framework for the Preparation and Presentation of Financial Statements means information has the quality of reliability “… when it is free from material error and bias and can be depended upon by users to represent faithfully that which it either purports to represent or could reasonably be expected to represent”.
The term assurance practitioner has the same meaning as auditor, and is generally used in relation to assurance engagements performed under ASAE 3000.
A life company may appoint an auditor to fulfil LPS 310 requirements that is different to the auditor responsible for undertaking the financial report audit or review under the Act however this is not a common practice.
See paragraph 4(c) of ASA 315 Identifying and Assessing the Risks of Material Misstatement through Understanding the Entity and Its Environment.
These requirements may differ between locally incorporated and foreign life companies.