Scope of this Standard on Assurance Engagements
This ASAE deals with direct engagements undertaken by an assurance practitioner to provide a reasonable assurance report on an activity’s performance evaluated against identified criteria. This ASAE may be applied to limited assurance engagements, adapted and supplemented as necessary in the engagement circumstances. (Ref: Para A1)
This ASAE addresses assurance engagements on performance:
- of any activity, whether within an entity or across multiple entities;
- evaluated against identified criteria selected or developed by the assurance practitioner or the engaging party;
- providing a reasonable assurance conclusion; and
- for either restricted use, by the engaging party or specified third parties, or to be publicly available, through tabling in Parliament or other means of distribution.
Agreed‑upon procedures engagements, where procedures are conducted and factual findings are reported but no conclusion is provided, and consulting engagements, for the purpose of providing advice on performance are not assurance engagements and are not dealt with in this ASAE. Agreed‑upon procedures engagements are addressed under Standard on Related Services, ASRS 4400.
Nature of a Performance Engagement
The essential elements of performance engagements are: (Ref: Appendix 1 and Appendix 2)
- a three party relationship involving:
- an assurance practitioner, including a State, Territory or Commonwealth Auditor-General;
- a responsible party or a number of responsible parties involved in the activities which are the subject matter of the performance engagement; and
- intended users, which are often the responsible party, Parliament and the general public;
- an appropriate activity (the subject matter);
- suitable criteria;
- sufficient appropriate evidence; and
- a written assurance report.
Performance engagements are most commonly conducted on an activity delivered or controlled by the Government. The objective of a performance engagement is to evaluate the performance of an activity, with respect to economy, efficiency and/or effectiveness against the identified criteria. The scope of a performance engagement is either determined by an Auditor‑General, based on the assessed information needs of Parliament, or of the general public, or by the engaging party based on the information needs of the engaging party and other identified users. (Ref: Para A2-A3)
Performance engagements are usually initiated by a State, Territory or the Commonwealth Auditor‑General and will not involve an engaging party, but may also be accepted by an assurance practitioner from an engaging party in the private sector. The authority of an Auditor‑General to conduct a performance engagement derives from their legislative mandate, consequently the party responsible for the activity does not initiate the performance engagement and their agreement to the terms of engagement is not usually required. The roles and responsibilities of the parties to a performance engagement initiated by an Auditor‑General are illustrated in Appendix 3. (Ref: Para A4)
Relationship with ASAE 3000, Other Pronouncements and Other Requirements
This ASAE adapts the requirements in ASAE 3000 Assurance Engagements Other than Audits or Reviews of Historical Financial Information, which is written for attestation engagements, as necessary, to direct engagements on performance and identifies the requirements of ASAE 3000 which the assurance practitioner is required to comply with in conducting a performance engagement in addition to the requirements of this ASAE. The Framework for Assurance Engagements, which defines and describes the elements and objectives of an assurance engagement, provides the context for understanding this ASAE and ASAE 3000.
This ASAE requires the assurance practitioner to apply the ASAE 3000 requirement to comply with relevant ethical requirements related to assurance engagements, or other professional requirements, or requirements imposed by law or regulation, that are at least as demanding. It also requires the Audit Office of the Auditor‑General to apply ASQM 1 or the lead assurance practitioner to be a member of a firm that applies ASQM 1 or other professional requirements, or requirements in law or regulation, that are at least as demanding as ASQM 1.
ASQM 1 Quality Management for Firms that Perform Audits or Reviews of Financial Reports and Other Financial Information, or Other Assurance or Related Services Engagements.
An assurance engagement performed under this ASAE may be part of a larger engagement. If multiple standards are applicable to the assurance engagement, the assurance practitioner applies, either:
- if the engagement can be separated into sections, the standard relevant to each section of the engagement, including this ASAE for the section on performance; or
- if the engagement cannot be separated into sections, the standard which is most directly relevant to the subject matter.
In circumstances when an assurance engagement performed under this ASAE includes a compliance section, the assurance practitioner applies both ASAE 3100 Compliance Engagements and ASAE 3500 as applicable, in conducting the assurance engagement.
Assurance conclusions on performance may be required by Parliament, legislation, industry bodies or other users in conjunction with assurance conclusions on historical financial statements, other historical financial information, compliance, controls and/or other subject matters. In these performance engagements the subject matter, identified criteria against which that subject matter is evaluated and the level of assurance sought may vary, in which case different standards will apply. Assurance reports can include separate sections for each subject matter, identified criteria or level of assurance in order that the different matters to be concluded upon are clearly differentiated.
A table showing the AUASB Standards that apply to certain engagements, depending on the subject matter and engagement circumstances, is contained in Appendix 4.