For purposes of this ASAE and other ASAEs, unless indicated to the contrary, the following terms have the meanings attributed below. (Ref: Para. A27)

Assurance engagement―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).  Each assurance engagement is classified on two dimensions: (Ref: Para. A3) 

1. Either a reasonable assurance engagement or a limited assurance engagement:
   1. Reasonable assurance engagement―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. 
   2. Limited assurance engagement―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.  (Ref: Para. A3–A7)
2. Either an attestation engagement or a direct engagement: (Ref: Para. A8)
   1. Attestation engagement―An assurance engagement in which a party other than the assurance practitioner measures or evaluates the underlying subject matter against the criteria.  A party other than the assurance practitioner also often presents the resulting subject matter information in a report or statement.  In some cases, however, the subject matter information may be presented by the assurance practitioner in the assurance report.  In an attestation engagement, the assurance practitioner’s conclusion addresses whether the subject matter information is free from material misstatement.  The assurance practitioner’s conclusion may be phrased in terms of: (Ref: Para. A179, A181)
      1. The underlying subject matter and the applicable criteria;
      2. The subject matter information and the applicable criteria; or
      3. A statement made by the appropriate party.
   2. Direct engagement―An assurance engagement in which the assurance practitioner measures or evaluates the underlying subject matter against the applicable criteria and the assurance practitioner presents the resulting subject matter information as part of, or accompanying, the assurance report. In a direct engagement, the assurance practitioner’s conclusion addresses the reported outcome of the measurement or evaluation of the underlying subject matter against the criteria.

Assurance practitioner―The individual, firm, or other organisation, whether in public practice, industry and commerce, or the public sector conducting an assurance engagement. Where this ASAE expressly intends that a requirement or responsibility be fulfilled by the lead assurance practitioner, the term the “lead assurance practitioner” rather than the “assurance practitioner” is used. (Ref: Para. A37)

Assurance practitioner’s expert―An individual or organisation possessing expertise in a field other than assurance, whose work in that field is used by the assurance practitioner to assist the assurance practitioner in obtaining sufficient appropriate evidence. An assurance practitioner’s expert may be either an assurance practitioner’s internal expert (who is a partner or staff, including temporary staff, of the assurance practitioner’s firm or a network firm), or an assurance practitioner’s external expert.

Assurance skills and techniques―Those planning, evidence gathering, evidence evaluation, communication and reporting skills and techniques demonstrated by an assurance practitioner that are distinct from expertise in the underlying subject matter of any particular assurance engagement or its measurement or evaluation. (Ref: Para. A9)

Criteria―The benchmarks used to measure or evaluate the underlying subject matter. The “applicable criteria” are the criteria used for the particular engagement. (Ref: Para. A10)

Engagement circumstances―The broad context defining the particular engagement, which includes: the terms of the engagement; whether it is a reasonable assurance engagement or a limited assurance engagement, the characteristics of the underlying subject matter; the measurement or evaluation criteria; the information needs of the intended users; relevant characteristics of the responsible party, the measurer or evaluator, and the engaging party and their environment; and other matters, for example events, transactions, conditions and practices, that may have a significant effect on the engagement.

[Deleted by the AUASB. Refer Aus 12.3.]

Engagement risk―The risk that the assurance practitioner expresses an inappropriate conclusion when the subject matter information is materially misstated. (Ref: Para. A11–A14)

Engaging party―The party(ies) that engages the assurance practitioner to perform the assurance engagement. (Ref: Para. A15)

Engagement team―All assurance practitioners and staff performing the engagement, and any other individuals who perform procedures on the engagement excluding an assurance practitioner’s external expert.

Evidence―Information used by the assurance practitioner in arriving at the assurance practitioner’s conclusion. Evidence includes both information contained in relevant information systems, if any, and other information. For purposes of the ASAEs: (Ref: Para. A147–A155)

1. Sufficiency of evidence is the measure of the quantity of evidence.
2. Appropriateness of evidence is the measure of the quality of evidence.

Firm―A sole assurance practitioner, partnership or corporation or other entity of individual assurance practitioners. “Firm” should be read as referring to its public sector equivalents where relevant.

Historical financial information―Information expressed in financial terms in relation to a particular entity, derived primarily from that entity’s accounting system, about economic events occurring in past time periods or about economic conditions or circumstances at points in time in the past.

Internal audit function―A function of an entity that performs assurance and consulting activities designed to evaluate and improve the effectiveness of the entity’s governance, risk management and internal control processes.

Intended users―The individual(s) or organisation(s), or group(s) thereof that the assurance practitioner expects will use the assurance report. In some cases, there may be intended users other than those to whom the assurance report is addressed. (Ref: Para. A16–A18, A37)

Lead assurance practitioner―The individual appointed by the firm, who is responsible for the engagement and its performance, and for the assurance report that is issued on behalf of the firm, and who, where required, has the appropriate authority from a professional, legal or regulatory body. The “lead assurance practitioner” should be read as referring to its public sector equivalents where relevant.

Measurer or evaluator―The party(ies) who measures or evaluates the underlying subject matter against the criteria. The measurer or evaluator possesses expertise in the underlying subject matter. (Ref: Para. A37, A39)

Misstatement―A difference between the subject matter information and the appropriate measurement or evaluation of the underlying subject matter in accordance with the criteria. Misstatements can be intentional or unintentional, qualitative or quantitative, and include omissions.

Misstatement of fact (with respect to other information)―Other information that is unrelated to matters appearing in the subject matter information or the assurance report that is incorrectly stated or presented. A material misstatement of fact may undermine the credibility of the document containing the subject matter information.

Other information―Information (other than the subject matter information and the assurance report thereon) which is included, either by law, regulation or custom, in a document containing the subject matter information and the assurance report thereon.

[Deleted by the AUASB. Refer Aus 12.1.]

[Deleted by the AUASB. Refer Aus 12.2.]

Professional judgement―The application of relevant training, knowledge and experience, within the context provided by assurance and ethical standards, in making informed decisions about the courses of action that are appropriate in the circumstances of the engagement.

Professional scepticism―An attitude that includes a questioning mind, being alert to conditions which may indicate possible misstatement, and a critical assessment of evidence.

Responsible party―The party(ies) responsible for the underlying subject matter. (Ref: Para. A37)

Risk of material misstatement―The risk that the subject matter information is materially misstated prior to the engagement.

Subject matter information―The outcome of the measurement or evaluation of the underlying subject matter against the criteria, i.e., the information that results from applying the criteria to the underlying subject matter. (Ref: Para. A19)

Underlying subject matter―The phenomenon that is measured or evaluated by applying criteria.

For the purposes of this ASAE and other ASAEs, references to “appropriate party(ies)” should be read hereafter as “the responsible party, the measurer or evaluator, or the engaging party, as appropriate.” (Ref: Para. A20, A37)