Assurance Engagements Covering Information in Addition to the General Purpose Water Accounting Report (Ref: PIITll. 6)

 In some cases, the assurance practitioner may perform an assurance engagement on a report that includes information on water assets and water liabilities, but that information does not comprise a general purpose water accounting report as described in paragraph 15(r) of this Standard. In such cases, this Standard may provide guidance for such an engagement.

Procedures for Reasonable Assurance and Limited Assurance Engagements (Ref: Para. 8-10, A82)

Some procedures that are required only for reasonable assurance engagements may nonetheless be appropriate in some limited assurance engagements. For example, although obtaining an understanding of control activities is not required for limited assurance engagements, in some cases, such as when information is recorded, processed, or reported only in electronic form, the assurance practitioner may nonetheless decide that testing controls, and therefore obtaining an understanding of relevant control activities, is necessary for a limited assurance engagement.

Independence (Ref: Para. 11-12, 16)

Relevant ethical requirements related to assurance engagements^[22] set out Independence Standards required to be complied with in relation to these engagements. Compliance with the relevant ethical requirements may potentially be threatened by a broad range of circumstances. Many threats fall into the following categories:

1. Self-interest, for example, undue dependence on total fees from the engaging party or the water report entity.

2. Self-review, for example, performing another service for the engaging party or the water report entity that directly affects the general purpose water accounting report.
3. Advocacy, for example, acting as an advocate on behalf of the engaging party with respect to the interpretation of the applicable criteria.
4. Familiarity, for example, a member of the engagement team ha\·ing a long association, or close or immediate family relationship,  with an employee  of the engaging party who is in a position to exert direct and significant influence over the preparation of the general purpose water accounting report.

5. Intimidation, for example, being pressured to reduce inappropriately the extent of work performed in order to lower fees, or being threatened with withdrawal of the assurance practitioner's registration by a registering authority that is associated with the engaging party's industry group.

In cases when identified threats are not at an acceptable level, relevant ethical requirements require that the threats be addressed by eliminating the circumstances that create the threats, applying safeguards to reduce threats to an acceptable level, or withdrawing from the engagement, where withdrawal is possible under applicable law or regulation.

Limited Assurance -A level of assurance that is meaningful (Ref: Para. 15(c)(i)b.)

Across the range of all limited assurance engagements, what is meaningful assurance can vary from just above assurance that is likely to enhance the intended users' confidence about the subject matter information to a degree that is clearly more than inconsequential to just below reasonable assurance. What is meaningful in a particular engagement represents a judgement within that range that depends on the engagement circumstances, including the information needs of intended users as a group, the criteria, and the underlying subject matter of the engagement.

             Because the level of assurance obtained by the assurance practitioner in limited assurance engagements varies, the assurance practitioner's report contains  an informative  summary  of the procedures performed, recognising that an appreciation of the nature, timing, and extent of procedures performed is essential to understanding the assurance practitioner's conclusion (see paragraphs 103(j)(ii) and Al 75-Al 77).

              Some of the factors that may be relevant in determining what constitutes meaningful assurance in a specific engagement include, for example:

1. The characteristics of the underlying subject matter and the criteria.
2. Instructions or other indications from the engaging party about the nature of the assurance the engaging party is seeking the assurance practitioner to obtain. For example, the terms of the engagement may stipulate particular procedures that the engaging party considers necessary or particular aspects of the subject matter information on which the engaging party would like the assurance practitioner to focus procedures.  However, the assurance practitioner may consider that other procedures are required to obtain sufficient appropriate evidence to obtain meaningful assurance.
3. Generally accepted practice, if it exists, with respect to assurance engagements for the particular subject matter information, or similar or related subject matter information.
4. The information needs of intended users as a group. Generally, the greater the consequence to intended users of receiving an inappropriate conclusion when the subject matter is materially misstated, the greater the assurance that would be needed in order to be meaningful to them. For example, in some cases, the consequence to intended users of receiving an inappropriate conclusion may be so great that a reasonable assurance engagement is needed for the assurance practitioner to obtain assurance that is meaningful in the circumstances.
5. The expectation by intended users that the assurance practitioner will form the limited assurance conclusion on the subject matter information within a short timeframe and at a low cost.

Assurance skills and techniques (Ref: Para. 15(f))

6. Systematic documentation practices and assurance report-writing skills.

Criteria (Ref: Para. 15(k))

Suitable criteria are required for reasonably consistent measurement or evaluation of an underlying subject matter within the context of professional judgement. Without the frame of reference provided by suitable criteria, any conclusion is open to individual interpretation and misunderstanding. The suitability of criteria is context-sensitive, that is, it is determined in the context of the engagement circumstances. Even for the same underlying subject matter there can be different criteria, which will yield a different measurement  or evaluation.  The suitability of criteria is not affected by the level of assurance, that is, if criteria are unsuitable for a reasonable assurance engagement, they are also unsuitable for a limited assurance engagement, and vice versa. Suitable criteria include, when relevant, criteria for presentation and disclosure.

Responsible party (Ref: Para. 15(fl))

The responsible party is defined in relation to the preparation and presentation of the general purpose water accounting report.

In many situations, the responsible party will be accountable for both:

1. Preparation and presentation of the general purpose water accounting report in accordance with AWAS 1; and
2. Managing the water assets and water liabilities of the water report entity.

However, in some situations, the responsible party may not be accountable for managing the water assets and water liabilities of the water report entity. For example, the responsible party may be required to prepare a general purpose water accounting report for a river system comprising several rivers and wetlands that are managed by other parties. The responsible party may require information to be provided by the parties that manage the water assets and water liabilities within the river system to assist the responsible party in preparing the general purpose water accounting report. The responsible party may seek representations from the other parties regarding the information provided.

ASAE 3000 includes requirements that apply to assurance engagements (other than audits or reviews of historical financial information), including engagements in accordance with this Standard. In some cases, this Standard may include additional requirements or application material in relation to those topics.

Skills, Knowledge and Experience (Ref: Para. 17)

3. Understanding water resource management instruments, such as water sharing plans, when relevant.
4. Knowledge of applicable law or regulation, if any, that affect how the water assets, water liabilities and changes in water assets and water liabilities of the water report entity should be reported.
5. Quantification and measurement methodologies for water assets, water liabilities and changes in water assets and water liabilities, including the associated scientific and estimation uncertainties, and alternative methodologies available.

The complexity of assurance engagements with respect to a general purpose water accounting report varies. In some cases, the engagement  may be relatively straightforward, for instance, an assurance engagement involving a water report entity restricted to only water rights (i.e. no physical flows of water). In this case, the engagement  may focus largely on the systems used to record and process any changes to the water rights portfolio (i.e. water made available from annual allocations or used, as measured by meters and shown in water consumption figures identified on invoices). When, however, the engagement is relatively complex, it is likely to require specialist competence in the quantification and reporting of water assets, water liabilities and changes in water assets and water liabilities, for instance, an assurance engagement involving a water report entity which has surface water and groundwater resources, as well as rights to water from outside the water report entity, with multiple organisations responsible for the management of water resources. Particular areas of expertise that may be relevant in such cases include:

1. Information systems expertise. For example, understanding how water information is generated, including how data is initiated, recorded, processed, corrected as necessary, collated and reported in a general purpose water accounting report.
2. Scientific and engineering expertise. For example:
   1. Mapping the flow of water in and out of a water report entity.
   2. Identifying the effect of uncertainty on the general purpose water accounting report.
   3. Knowledge of the quality control policies and procedures implemented by the responsible party and, where applicable, the party responsible for managing the water assets and water liabilities of the water report entity.
   4. Experience with specific types of water entities and related systems for measuring and reporting water assets, water liabilities and changes in water assets and water liabilities.
   5. The operation of physical meters and other quantification approaches, including modelling and estimation, and the selection of appropriate flow rate factors.

Preconditions for Accepting the Engagement

Determining the Appropriateness of the Subject Matter (Ref: Para. 16)

ASAE 3000 requires the assurance practitioner to determine whether the underlying subject matter is appropriate.^[23] In the case of a general purpose water accounting report, the water report entity's water assets, water liabilities and changes in water assets and water liabilities  are the underlying subject matter of the engagement. That underlying subject matter will be appropriate if, amongst other things, the water report entity's water assets, water liabilities and changes in water assets and water liabilities are capable of consistent quantification using suitable criteria.^[24]

Water volwnes may be quantified by:

1. Measurement (or monitoring) of water volumes and flow rates using metering, continuous water movement monitoring or periodic sampling;
2. Measuring a surrogate activity, such as water consumption;
3. Calculating water assets, water liabilities and changes in water assets and water liabilities using models and incorporating, for example, water report entity-specific flow factors, or average flow factors for a region, industry or process; or
4. Estimating volumes based on other available information and expected volwnes.

Determining the Suitability of the Criteria (Ref: Para. I8(a))

Suitable criteria exhibit the following characteristics: relevance, completeness, reliability, neutrality, and understandability.^[25]

Water Assets and Water Liabilities to be Accounted For (Ref: Para. IS(a)(i))

Determining the water assets and water liabilities to be included in a general purpose water accounting report will depend on various factors, including:

1. The nature of the water report entity, which may range from smaller, less complex entities to larger entities encompassing many water entities across jurisdictional borders.
2. Whether one party is accountable both for preparing and presenting the general purpose water accounting report and for managing the water assets and water liabilities being accounted for. Where the responsible party is accountable for preparing and presenting the general purpose water accounting report, but not accountable for managing some or all of the water assets and water liabilities being accounted for, it relies on the party (or parties) accountable for managing the water assets and water liabilities to provide information on water assets and water liabilities to be included in the general purpose water accounting report.
3. The types of water assets and water liabilities included within the water report entity.

Acceptable Quantification Approaches (Ref: Para. I 8(a)(ii))

AWAS 1 provides for the use of different quantification approaches for the various items presented in the water accounting statements, supported by note disclosures regarding the choice of approaches and whether they are in accordance with relevant quantification standards or established practices, the levels of accuracy or precision achieved by the quantification approaches and the sensitivities associated with the key assumptions used in the qualification approaches. ^[26]

3. How the responsible party determines whether previously reported water assets and water liabilities should be restated.

4. The categorisation of water assets and water liabilities in the general purpose water accounting report.
5. A statement regarding the uncertainties relevant to the quantification of the water assets, water liabilities and changes in water assets and water liabilities, including:
   1. their causes;
   2. how they have been addressed; and
   3. their effects on the general purpose water accounting report.

6. A statement regarding uncertainties relevant to the future prospects note in the general purpose water accounting report.
7. Information about unaccounted-for differences, if any, including the likely reasons for unaccounted-for differences, whether they are considered to be acceptable, the pattern of unaccounted-for differences over time and whether they are expected to continue in future reporting periods.
8. Changes, if any, in the matters mentioned in this paragraph or in other matters that materially affect the comparability of the general purpose water accounting report with a prior period(s).
9. Water assets and water liabilities relevant to the water report entity that have been excluded from the general purpose water accounting report, if any, and the reasons for their exclusion.

Who Developed the Criteria (Ref: Para. 18(b)(iii))

Where AWAS 1 is not used as the basis for preparing the general purpose water accounting report, or where AWAS 1 is supplemented by other criteria, it may not be clear who developed the criteria unless it is stated in the explanatory notes to the general purpose water accounting report.

The Responsible Party's Records (Ref: Para. lB(b)(iv))

As noted in paragraph A62(b), for some engagements concerns about the condition and reliability of the responsible party's records may cause the assurance practitioner to conclude that it is unlikely that sufficient appropriate evidence will be available to support an unmodified conclusion on the general purpose water accounting report. This may occur when the responsible party has little experience with the preparation of general purpose water accounting reports.

Agreement on the Terms of the Engagement (Ref: Para. 16, 20)

             ASAE 3000 requires that the assurance practitioner not agree to a change in the terms of the engagement where there is no reasonable justification for doing so.^[27] A request to change the scope of the engagement may not have a reasonable justification when, for example, the request is made to exclude certain water assets and water liabilities from the scope of the engagement because of the likelihood that the assurance practitioner's conclusion would be modified.

Smaller engagements or more straightforward engagements (see paragraph Al6) may be conducted by a very small engagement team. With a smaller team, coordination of, and communication between, team members is easier. Establishing the overall engagement strategy for a smaller engagement, or for a more straightforward engagement, need not be complex or time-consuming exercise.  For example, a brief memorandum, based on discussions with the responsible party, may serve as the documented engagement strategy if it covers the matters noted in paragraph 24.

The assurance practitioner may decide to discuss elements of planning with the responsible party when determining the scope of the engagement or to facilitate the conduct of the engagement (for example, to coordinate some of the planned procedures with the work of the entity's personnel). Although these discussions often occur, the overall engagement strategy and the engagement plan remain the assurance practitioner's responsibility. When discussing matters included in the overall engagement strategy or engagement plan, care is required in order not to compromise the effectiveness of the engagement. For example, discussing the nature and timing of detailed procedures with the responsible party may compromise the effectiveness of the engagement by making the procedures too predictable.

The performance of an assurance engagement is an iterative process. As the assurance practitioner performs planned procedures, the evidence obtained may cause the assurance practitioner to modify the nature, timing or extent of other planned procedures. In some cases, information may come to the assurance practitioner's attention that differs significantly from that expected at an earlier stage of the engagement. For example, systematic errors discovered when performing procedures in one location may indicate that it is necessary to visit additional locations.

Planning to Use an Assurance Practitioner's Expert or Another Assurance Practitioner (Ref: Para. 24(e})

The engagement may be performed by a multi-disciplinary team that includes one or more experts, particularly on relatively complex engagements when specialist competence in the quantification and reporting of water assets, water liabilities and changes in water assets and water liabilities is likely to be required (see paragraph A16).

 The work of another assurance practitioner may be used in relation to, for example, a location other than where the general purpose water accounting report is prepared. Relevant considerations when the engagement team plans to request another assurance practitioner to perform work on information to be included in the general purpose water accounting report may include:

1. Whether the other assurance practitioner understands and complies with the ethical requirements that are relevant to the engagement and, in particular, is independent.
2. The other assurance practitioner's professional competence.
3. The extent of the engagement team's involvement in the work of the other assurance practitioner.
4. Whether the other assurance practitioner operates in a regulatory environment that actively oversees that assurance practitioner.

Determining Materiality When Planning the Engagement (Ref: Para. 25-26)

1. Misstatements, including omissions, are considered to be material if they, individually or in the aggregate, could reasonably be expected to influence relevant decisions of users taken on the basis of the general purpose water accounting report;

2. Judgements about materiality are made in light of surrounding circumstances, and are affected by the size or nature of a misstatement, or a combination of both; and

3. Judgements about matters that are material to intended users of the general purpose water accounting report are based on a consideration of the common information needs of intended users as a group. Unless the engagement has been designed to meet the particular information needs of specific users, the possible effect of misstatements on specific users, who information needs may vary widely, is not ordinarily considered.

The discussion in AWAS 1, together with the characteristics described in paragraph A32, provide a frame of reference to the assurance practitioner in determining materiality for the engagement.

Materiality relates to the water assets and water liabilities covered by the assurance practitioner's conclusion. Therefore, materiality is set in relation to the water accounting statements, note disclosures and the accountability statement and not the contextual statement.

The assurance practitioner's determination of materiality is a matter of professional judgement, and is affected by the assurance practitioner's perception of the common information needs of intended users as a group.

In this context, it is reasonable for the assurance practitioner to assume that intended users:

1. Have a reasonable knowledge of water accounting and reporting, and a willingness to study the information in the general purpose water accounting report with reasonable diligence;

2. Understand that the general purpose water accounting report is prepared and assured to levels of materiality, and have an understanding of any materiality concepts included in the applicable criteria;

3. Understand that the quantification of water assets, water liabilities and changes  in water assets and water liabilities involves uncertainties (see paragraphs A48-A53); and
4. Make reasonable decisions on the basis of the information in the general purpose water accounting report.

6. The responsible party, for fulfilling its accountability in relation to preparation and presentation of the general purpose water accounting report.
7. Regulators and policy makers. Their information needs may relate to monitoring the disclosure regime with a view to introducing a regulation, or a broad range of government policy decisions related to water use, usually based on aggregated information.

The assurance practitioner may not be able to identify all those who will read the assurance report, particularly where there are a large number of people who have access to it. In such cases, particularly where possible users are likely to have a broad range of interests with respect to water assets, water liabilities and changes in water assets and water liabilities, intended users may be limited to major stakeholders with significant and common interests. Intended users may be identified in different ways, for example, by agreement between the assurance practitioner and the engaging party, or by law or regulation.

While judgements about materiality are made in light of surrounding circumstances, and are affected by both quantitative and qualitative factors, it should be noted, that decisions regarding materiality are not affected by the level of assurance, that is, materiality for a reasonable assurance engagement is the same as for a limited assurance engagement.

Quantitative factors may involve:

1. Applying a percentage to a chosen benchmark as a starting point in determining materiality. Factors that may affect the identification of an appropriate benchmark and percentage include:
   1. The elements of the general purpose water accounting report (for example, surface water assets, groundwater assets, claims to water, water liabilities, net water assets, changes in water assets and water liabilities). A benchmark that may be appropriate, depending on the circumstances, is total water assets.
   2. How the general purpose water accounting report presents relevant information, for example, whether it includes a comparison of water assets, water liabilities and changes in water assets and water liabilities with a prior period(s), in which case determining materiality in relation to the comparative information may be a relevant consideration.

1. 3. The relative variability of the benchmark. For example, if water assets, water liabilities and changes in water assets and water liabilities vary significantly from period to period, it may be appropriate to set materiality relative to the lower end of the fluctuation range even if the current period is higher.

2. The volume of a particular type of water asset or water liability or the nature of a particular disclosure. In some cases, there may be particular types of water assets and water liabilities or disclosures for which misstatements of lesser or greater amounts than materiality for the general purpose water accounting report as a whole is appropriate. For example, the assurance practitioner may consider it appropriate to set a lower or greater materiality for a particular type of water asset, such as dead water storage, or for water assets from a particular source, such as water from unlicensed storages for a water supply authority.
3. The requirements of the applicable criteria, such as AWAS 1.

3. Whether there are one or more types of water assets, water liabilities, changes in water assets and water liabilities or disclosures on which the attention of the intended users tends to be focused, for example, for certain water report entities, the way in which the water assets are utilised to provide water for environmental benefit may be particularly important.

4. The nature of the water report entity.

5. The industry and the economic and regulatory environment in which the water report entity operates.

Revision as the Engagement Progresses (Ref: Para. 27)

Materiality may need to be revised as a result of a change in circumstances during the engagement (for example, unusually dry or wet climatic conditions that significantly impact water assets or water liabilities, disruption to operations resulting from damage to critical infrastructure or disposal of a major part of the business of the water report entity), new information, or a change in the assurance practitioner's understanding of the water report entity and its operations as a result of performing procedures. For example, it may become apparent during the engagement that actual water assets and water liabilities are likely to be substantially different from those used initially to determine materiality. If during the engagement the assurance practitioner concludes that a lower materiality for the general purpose water accounting report (and, if applicable, materiality level or levels for particular types of water assets or water liabilities or disclosures) than that initially determined is appropriate, it may be necessary to revise performance materiality, and the nature, timing and extent of the further procedures.

The assurance practitioner uses professional judgement to determine the extent of the understanding and the nature, timing and extent of procedures to identify and assess risks of material misstatement that are required to obtain reasonable or limited assurance, as appropriate. The assurance practitioner's primary consideration is whether the understanding that has been obtained and the identification and assessment of risks are sufficient to meet the relevant objectives stated in this Standard.

The depth of the understanding that is required by the assurance practitioner is less than that possessed by the responsible party, and both the depth of the understanding and the nature, timing and extent of procedures to identify and assess risks of material misstatement are less for a limited assurance engagement than for a reasonable assurance engagement.

Obtaining an understanding and identifying and assessing risks of material misstatement is an iterative process. Procedures to obtain an understanding of the water report entity and its circumstances and to identify and assess risks of material misstatement by themselves do not provide sufficient appropriate evidence on which to base the assurance conclusion.

Obtaining an Understanding of the Water Report Entity and Its Circumstances

Water Management Objectives and Strategies (Ref: Para. 28(c))

Consideration of the water management strategy, if any, and associated economic, regulatory, physical and reputational risks, may assist the assurance practitioner to identify risks of material misstatement.

Use of a Management's Expert by the Responsible Party (Ref: Para. 28(e))

When the responsible party uses a management's expert because expertise in a field other than water accounting is needed to prepare the general purpose water accounting report, the risks of material misstatement may increase because this may  indicate some complexity, or because  the responsible party may not possess knowledge of the field of expertise. Alternatively, provided the responsible party implements relevant controls around using the work of a management's expert, the risks of material misstatement may decrease.

Significant Events (Ref: Para. 28(t))

Significant events that impact the information inc1uded in the general purpose water accounting report may include unexpected events such as damage to critical infrastructure or unseasonal flooding, or planned events, for example, as part of a maintenance schedule.

Uncertainty (Ref: Para: 28(g), 103(f))

The quantification process for water assets and water liabilities can rarely be 100% accurate due to:

1. Scientific uncertainty: This arises because of incomplete scientific knowledge about the measurement of water volumes. For example, the quantification rate of the movement of water through a system, via modelling, is subject to uncertainty due to incomplete scientific knowledge of the process. The degree to which scientific uncertainty affects the quantification of reported water assets, water liabilities and changes in water assets and water liabilities is beyond the control of the responsible party or those providing information to the responsible party. However, the potential for scientific uncertainty to result in unreasonable variations in reported water assets, water liabilities and changes in water assets and water liabilities can be negated by the use of criteria that stipulate particular scientific assumptions  to be used in preparing the general purpose water accounting report, or particular factors that embody those assumptions; and

2. Estimation (or measurement) uncertainty: This results from the measurement and calculation processes used to quantify water assets, water liabilities and changes in water assets and water liabilities within the bounds of existing scientific knowledge or the practicality of how many measurement points can be afforded. Estimation uncertainty may relate to the data on which an estimate is based (for example, it may relate to uncertainty inherent in measurement instruments used), or the method, including where applicable the model, used in making the estimate (sometimes known as parameter and model uncertainty, respectively).  The degree of estimation uncertainty  is often controllable by the responsible party or those providing information to the responsible party. Reducing the degree of estimation uncertainty may involve greater cost.

The fact that quantifying water assets, water liabilities and changes in water assets and water liabilities is subject to uncertainty does not mean that water assets and water liabilities are inappropriate as a subject matter. As long as the assumptions and models are reasonable in the circumstances and adequately disc1osed, the general purpose water accounting report will ordinarily be capable of being subjected to an assurance engagement.

A discussion in the notes to the general purpose water accounting report of the nature, causes, and effects of the uncertainties that affect the general purpose water accounting report alerts intended users to the uncertainties associated with the quantification of water assets, water liabilities and changes in water assets and water liabilities. This may be particularly important where the general purpose water accounting report may be available to a broad range of users.

Certain disclosures in a general purpose water accounting report may be subject to greater uncertainty, such as future prospects of the water report entity, contingent water assets, contingent water liabilities and unaccounted-for differences. Accordingly, the future prospects note should contain sufficient information to enable users to understand how the responsible party determined both the water expected to be available and water liabilities and future water commitments  expected  to be settled within twelve months of the reporting date, and the level of uncertainty associated with these disclosures. Similarly, where there is an unaccounted-for difference, a note disclosure should provide information relevant to users in understanding this disclosure, for example, the possible causes of the unexplained difference, whether it is acceptable in the context of the water report entity, the pattern of unaccounted-for differences over time and whether they are expected to continue in future reporting periods.

             In some cases, however, the assurance practitioner may decide that it is inappropriate to undertake an assurance engagement if the impact of uncertainty on information in the general purpose water accounting report is very high. This may be the case when, for example, a significant proportion of the reported water assets, water liabilities and changes in water assets and water liabilities are from sources that are not monitored and estimation methods are not sufficiently sophisticated. It should be noted that decisions whether to undertake an assurance engagement in such circumstances are not affected by the level of assurance, that is, if it is not appropriate for a reasonable assurance engagement, it is also not appropriate for a limited assurance engagement, and vice versa.

Procedures to Obtain an Understanding and to Identify and Assess Risks of Material Misstatement (Ref: Para. 29)

Although the assurance practitioner is required to perform all the procedures in paragraph 29 in the course of obtaining the required understanding of the water report entity, the assurance practitioner is not required to perform all of them for each aspect of that understanding.

Analytical Procedures (Ref; Para. 29(b))

Analytical procedures performed to obtain an understanding of the water report entity and its circumstances and to identify and assess risks of material misstatement may identify aspects of the water report entity of which the assurance practitioner was unaware and may assist in assessing the risks of material misstatement in order to provide a basis for designing and implementing responses to the assessed risks.  Analytical procedures  may include, for example, comparing water assets and water liabilities of a water report entity from one period to the next, or with a similar water report entity.

Analytical procedures may help identify the existence of unusual events and amounts, ratios, and trends that might indicate matters that have implications for the engagement. Unusual or unexpected relationships that are identified may assist the assurance practitioner in identifying risks of material misstatement.

However, when such analytical procedures use data aggregated at a high level (which may be the situation with analytical procedures performed to obtain an understanding of the water report entity and its circumstances and to identify and assess risks of material misstatement), the results of those analytical procedures only provide a broad initial indication about whether a material misstatement may exist.  Accordingly, in such cases, consideration of other evidence that has been gathered when identifying the risks of material misstatement together with the results of such analytical procedures may assist the assurance practitioner in understanding and evaluating the results of the analytical procedures.

Obsentation and Inspection (Ref: Para. 29(c))

Observation consists of looking at a process or procedure, or control activities, being performed by others. Observation provides evidence about the performance of a process or procedure, or control activity, but is limited to the point in time at which the observation takes place, and by the fact that the act of being observed may affect how the process or procedure, or control activity, is performed.

Inspection invokes:

1. Examining records or documents, whether internal or external, in paper form, electronic form, or other media, for example calibration records of a monitoring device. Inspection of records and documents provides evidence of varying degrees of reliability, depending on their nature and source and, in the case of internal records and documents, on the effectiveness of the controls over their production; or
2. A physical examination of, for example, a calibrating device.

Observation and inspection  may support enquiries  of the responsible  party and others, and may also provide information about the water report entity and its circumstances. Examples of such procedures include observation or inspection of the following:

1. The water report entity's operations. Observing processes and equipment, including monitoring equipment.

2. Documents (such as legislation or water resource management instruments), records (such as calibration records and results from metering equipment), and manuals detailing information collection procedures and internal controls.
3. Reports prepared for the responsible party, such as internal or external reports with respect to the water information management systems or water accounting and reporting systems.
4. Reports prepared by the responsible party, such as quarterly management reports or minutes of board of directors' meetings.

Obtaining an Understanding of Internal Control (Ref: Para. 30L-3 IR)

In a limited assurance engagement, the assurance practitioner is not required to obtain an understanding of an of the components of internal control relevant to water accounting and reporting as is required in a reasonable assurance engagement. In addition, the assurance practitioner is not required to evaluate the design of controls and determine whether they have been implemented. Therefore, in a limited assurance engagement, while it may often be appropriate to enquire of the responsible party about control activities and monitoring of controls relevant to water accounting and reporting, it will often not be necessary to obtain a detailed understanding of these components of internal control.

The assurance practitioner's understanding of relevant components of internal control may raise doubts about whether sufficient appropriate evidence is available for the assurance practitioner to complete the engagement. For example (see also paragraphs A63-A64, A84-A85, A89):

1. Concerns about the integrity of those preparing the general purpose water accounting report may be so serious as to cause the assurance practitioner to conclude that the risk of misrepresentation in the general purpose water accounting report is such that an engagement cannot be conducted.
2. Concerns about the condition and reliability of the responsible party's records may cause the assurance practitioner to conclude that it is unlikely that sufficient appropriate evidence will be available to support an unmodified conclusion on the general purpose water accounting report.

Control Activities Relevant to the Engagement (Ref: Para. 30R(d))

The assurance practitioner's judgement about whether particular control activities are relevant to the engagement may be affected by the level of sophistication, documentation and formality of the water information system, including the related business processes, relevant to water accounting and reporting. As water accounting and reporting evolves, it can be expected that so too will the level of sophistication, documentation and formality of water information systems and related control activities.

Other Procedures to Obtain an Understanding and to Identify and Assess the Risks of Material Misstatement

Other Engagements Performed (Ref: Para. 32)

Information obtained from other engagements performed relating to the water report entity may relate to, for example, aspects of the water report entity's control environment.

Performing Procedures at Other Locations (Ref: Para. 36)

Performing observation and inspection, as well as other procedures, at locations other than where the general purpose water accounting report is prepared (often referred to as a "site visit") may be important in building on the understanding of the responsible party and the water report entity that the assurance practitioner develops. Because the assurance practitioner's understanding of the responsible party and the water report entity and identification and assessment of risks of material misstatement can be expected to be more comprehensive for a reasonable assurance engagement than for a limited assurance engagement, the number of locations at which procedures are performed in the case of a reasonable assurance engagement will ordinarily be greater than in the case of a limited assurance engagement.

Performing procedures at other locations (or having another assurance practitioner perform such procedures on behalf of the assurance practitioner) may be done as part of planning, when performing procedures to identify and assess risks of material misstatement, or when responding to assessed risks of material misstatement. Performing procedures at significant locations is often particularly important for an engagement being undertaken for the first time when considering the completeness of water assets, water liabilities and changes in water assets and water liabilities included in the general purpose water accounting report, and when establishing whether the data collection and processing systems, and estimation techniques, are appropriate relative to the subject matter and related uncertainties.

As noted in paragraph A66, performing procedures at other locations may be important in building on the understanding of the responsible party and the water report entity that the assurance practitioner develops by performing procedures at the location where the general purpose water accounting  report is prepared.  For many reasonable assurance  engagements, the assurance practitioner will also judge it necessary to perform procedures at each significant location to respond to assessed risks of material misstatement. For a limited assurance engagement, a meaningful level of assurance may not be able to be obtained without the assurance practitioner having performed procedures at a selection of significant locations.

Where the responsible party or the water report entity has significant locations and the assurance practitioner determines that effective and efficient procedures cannot be performed at those locations by the assurance practitioner (or another assurance practitioner on their behalf), alternative procedures may include one or more of the following:

1. Reviewing source documents, water flow diagrams and other hydrological modelling systems.
2. Analysing questionnaire responses from the locations.
3. Inspecting satellite imagery of the locations.

2. The number, ease of access to and size of locations, and their contribution to overall water assets, water liabilities and changes in water assets and water liabilities.
3. Whether different processes, or processes using different technologies are used at the locations. Where this is the case, it may be appropriate to perform  procedures at or for a selection of locations using different processes or technologies.
4. The methods used at different locations to gather information about water assets, water liabilities and changes in water assets and water liabilities.
5. The experience of relevant staff associated with different locations. 
6. Varying the selection of locations over time.

Internal Audit (Ref: Para. 37)

The internal audit function is likely to be relevant to the engagement if the nature of the internal audit function's responsibilities and activities are related to water accounting and reporting and the assurance practitioner expects to use the work of the internal audit function to modify the nature or timing, or reduce the extent, of procedures to be performed.

Identifying and Assessing Risks of Material Misstatement

Risks of Material Misstatement at the General Purpose Water Accounting Report Level (Ref: Para. 38L(a)--38R(a))

Risks of material misstatement at the general purpose water accounting report level refer to risks that relate pervasively to the general purpose water accounting report as a whole. Risks of this nature are not necessarily risks identifiable with a specific type of water asset or water liability or disclosure level. Rather, they represent circumstances that may increase the risks of material misstatement more generally, for example, through management override of internal control. Risks of material misstatement at the general purpose water accounting

report level may be especially relevant to the assurance practitioner's consideration of the risks of material misstatement arising from fraud.

7. Misleading presentation of information in the general purpose water accounting report, for example, unduly highlighting particularly favourable data or trends.

8. Inconsistent quantification approaches and reporting policies, including different methods for determining which water assets and water liabilities are included in the general purpose water accounting report.
9. Errors in unit conversion when consolidating information from locations.
10. Inadequate disclosure of scientific uncertainties and key assumptions in relation to estimates.

The Use of Assertions (Ref: Para. 38L(b) and 38R(b))

 Assertions are used by the assurance practitioner in a reasonable assurance engagement, and may be used in a limited assurance engagement, to consider the different types of potential misstatements that may occur.

1. 3. Classification and understandability-information about water assets, water liabilities, changes in water assets, changes in water liabilities and water flows is appropriately presented and described, and disclosures are clearly expressed.
   4. Accuracy and quantification-quantification approaches and related information are appropriately disclosed.
   5. Consistency-quantification policies are consistent with those applied in the prior period, or changes are justified and have been properly applied and adequately disclosed; and comparative information, if any, is as reported in the prior period or has been appropriately restated.

Reliance on Internal Control (Ref: Para. 38R)

If the assurance practitioner's assessment of risks of material  misstatement  at the assertion level includes an expectation that the controls are operating effectively (that is, the assurance practitioner intends to rely on the operating effectiveness of controls in determining the nature, timing and extent of other procedures), the assurance practitioner is required by paragraph 43R to design and perform tests of the operating effectiveness of those controls.

Causes of Risks of Material Misstatement (Ref: Pa1a. 39)

Fraud (Ref: Para. 33, 39(a))

Misstatements in the general purpose water accounting report can arise from either fraud or error. The distinguishing factor between fraud and error is whether the underlying action that results in the misstatement of the general purpose water accounting report is intentional or unintentional.

Incentives for intentional misstatement of the general purpose water accounting report may arise if, for example, those who are directly involved with, or have the opportunity to influence, the water accounting and reporting process have a significant portion of their compensation contingent upon achieving aggressive water management targets. Other incentives to either under or overstate water assets and water liabilities may result from the water management strategy, if any, and associated economic, regulatory, physical and reputational risks.

Although fraud is a broad legal concept, for the purposes of this Standard, the assurance practitioner is concerned with fraud that causes a material misstatement in the general purpose water accounting report. Although the assurance practitioner may suspect or, in rare cases, identify the occurrence of fraud, the assurance practitioner does not make legal determinations of whether fraud has actually occurred.

Non-Compliance with Law and Regulation (Ref: Para. 39(b), lOS(c))

regulations). Planning and performing an engagement with professional scepticism, as required by paragraph 21 of this Standard, is important in the context of remaining alert to the possibility that procedures applied for the purpose of forming a conclusion on the general purpose water accounting report may bring instances of identified or suspected non-compliance with such law or regulation to the assurance practitioner's attention.

Other Causes of Risks of Material Misstatement (Ref: Para. 39)

1. 1. Greater management intervention to specify the quantification approaches or reporting treatment.
   2. Greater manual intervention for data collection and processing.
   3. Complex calculations or quantification approaches and reporting principles.
   4. The nature of non-routine water assets, water liabilities and changes in water assets and water liabilities, which may make it difficult for the responsible party to implement effective controls over the risks.
   5. Quantification approaches and reporting principles for estimates may be subject to differing interpretation.
   6. Required judgements may be subjective or complex.

8. In the absence of any evidence of potential causes for change to unaccounted-for differences, an unusually large deviation in an unaccounted-for difference may be an indicator that the systems and processes in place for water accounting and reporting are either not operating effectively or not fit for purpose.

1. Where the source data used in quantification is not maintained by the responsible party, or where quantification approaches commonly in use are imprecise or lead to large variations in reported water assets and water liabilities.

7. Matters that the assurance practitioner may consider in obtaining an understanding of how the responsible party makes significant estimates and the data on which they are based include, for example:
   1. An understanding of the data on which estimates are based;
   2. The method, including where applicable the model, used in making estimates;
   3. Relevant aspects of the control environment and water information system;
   4. Whether the responsible party has used a management's expert;
   5. The assumptions underlying estimates;

1. 6. Whether there has been or ought to have been a change from the prior period in the methods for making estimates and, if so, why; and
   7. Whether and, if so, how the responsible party has assessed the effect of estimation uncertainty on the general purpose water accounting report, including:

0                      Whether and, if so, how the responsible party has considered alternative assumptions or outcomes by, for example, performing a sensitivity analysis to determine the effect of changes in the assumptions on an estimate;

0                      How the responsible party determines the estimate when analysis indicates a number of outcome scenarios; and

0                Whether the responsible party monitors the outcome of estimates made in the prior period, and whether it has appropriately responded to the outcome of that monitoring procedure.

Examples of other factors that may lead to risks of material misstatement include:

1. Human error in the quantification of water assets, water liabilities and changes in water assets and water liabilities, which may be more likely to occur if personnel are unfamiliar with, or not well-trained regarding, water quantification processes or data recording.

2. Undue reliance on a poorly designed water information system, which may have few effective controls, for example, the use of spreadsheets without adequate controls.
3. Manual adjustment of otherwise automatically recorded data, for example, manual input may be required if a flow meter is not working.
4. Significant external developments such as heightened public scrutiny of a particular water report entity.

Limited and Reasonable Assurance Engagements (Ref: Para. 8-10, 15(c)(i), 40-46R, 47L-48R, 54, A2)

3. In a reasonable assurance engagement, analytical procedures performed in response to assessed risks of material misstatement involve developing expectations regarding recognised volumes or note disclosures that are sufficiently precise to identify material misstatements. In a limited assurance engagement, analytical procedures may be designed to support expectations regarding the direction of trends, relationships and ratios rather than to identify misstatements with the level of precision expected in a reasonable assurance engagement. ^[29]

Further, when significant fluctuations, relationships or differences are identified, appropriate evidence in a limited assurance engagement may be obtained by making enquiries of management and those charged with governance and considering responses received in the light of known engagement circumstances, without obtaining additional evidence as is required by paragraph 48R in the case of a reasonable assurance engagement.

In addition, when undertaking analytical procedures in a limited assurance engagement the assurance practitioner may, for example:

1. 1. Use data that is more highly aggregated, for example, data at a regional level rather than at one location, or monthly data rather than weekly data.
   2. Use data that has not been subjected to separate procedures to test its reliability to the same extent as it would be for a reasonable assurance engagement.

Overall Responses to Assessed Risks of Material Misstatement (Ref: Para. 40)

Overall responses to address the assessed risks of material misstatement at the general purpose water accounting report level may include:

1. Emphasising to the assurance personnel the need to maintain professional scepticism.
2. Assigning more experienced staff or those with special skills or using experts.
3. Providing more supervision.
4. Incorporating additional elements of unpredictability in the selection of further procedures to be performed.
5. Making general changes to the nature, timing, or extent of procedures, for example: performing procedures at the period end instead of at an interim date; or modifying the nature of procedures to obtain more persuasive evidence.

Such considerations, therefore, have a significant bearing on the assurance practitioner's general approach, for example, the relative emphasis on tests of controls versus other procedures (see also paragraphs A62-A64 and A89).

Examples of Further Procedures (Ref: Para. 42L-42R, 45R)

Further procedures may include, for example:

1. Testing the operating effectiveness of controls over the collection and recording of flow data, such as review of the meta data associated with the gauging site to determine if there have been changes to monitoring practices, instrumentation catchment conditions or data management procedures.

2. Review of rating curves or capacity tables and whether they have been derived in accordance with best practice.

3. Performing quality assessment tests on data including comparison of annual maximum flows with nearby stations, plotting of time series flow data with concurrent rainfall data to assess for missing data; undertaking single or double mass curve analysis to identify changes or inconsistencies in flow records.
4. Comparison of observed water balance assessments with modelled assessments.
5. Observing the taking of gaugings or the procedures for the maintenance of gauging stations.
6. Analysing the soundness and appropriateness of unique measurement or quantification techniques, particularly complex approaches that may involve, for example, curve derivation or extrapolation.
7. Reviewing quality assurance or quality controlling procedures and the assigning of quality codes.
8. Reviewing the accuracy of data management procedures to ensure that recorded data are being accurately, archived in a timely manner and at an appropriate time step.

Factors that May Influence Assessed Risks of Material Misstatement (Ref: Para. 42L(a}-42R(a)

1. The quality control policies and procedures implemented at various locations, whether internal or external.

10. The complexity of criteria and of quantification and reporting policies.

Persuasiveness of Evidence (Ref; Para. 42L(b}-42R(b))

To obtain more persuasive evidence because of a higher assessment of risk of material misstatement, the assurance practitioner may increase the quantity of the evidence, or obtain evidence that is more relevant or reliable, for example, by obtaining corroborating evidence from a number of independent sources.

Tests of Controls

Operating Effectiveness of Controls (Ref: Para. 42R(a)(ii), 43R(a))

In the case of very small water report entities or immature water information systems, there may not be many control activities that could be identified by the assurance practitioner, or the extent to which their existence or operation have been documented may be limited. In such cases, it may be more efficient for the assurance practitioner to perform further procedures that are primarily other than tests of controls. In some rare cases, however, the absence of control activities or of other components of control may make it impossible to obtain sufficient appropriate evidence (see also paragraphs A62-A64 and A84-A85).

Risks for Which Tests of Controls Are Necessary to Provide Sufficient Appropriate Evidence (Ref: Para. 43R(b))

The quantification of water assets, water liabilities and changes in water assets and water liabilities may include processes that are highly automated with little or no manual intervention, for example, where relevant information is recorded, processed, or reported only in electronic form such as in a continuous monitoring system, or when the processing of flow data is integrated with an information technology-based operational or water reporting system. In such cases:

1. Evidence may be available only in electronic form, and its sufficiency and appropriateness dependent on the effectiveness of controls over its accuracy and completeness.
2. The potential for improper initiation or alteration of information to occur and not be detected may be greater if appropriate controls are not operating effectively.

Confirmation Procedures (Ref: Para. 46R)

Analytical Procedures Performed in Response to Assessed Risks of Material Misstatement (Ref: Para. 47L-48R)

In many cases, the fixed nature of physical relationships between particular water assets and water liabilities and other measurable phenomena allows for the design of powerful analytical procedures (for example, the relationship between water demand and usage in light of climate change indicators such as El Nino or La Nina).

Other analytical procedures may involve comparisons of information about the water report entity's water assets and water liabilities with external data such as industry averages; or the analysis of trends during the period to identify anomalies for further investigation, and trends across periods for consistency with other circumstances such as the inclusion or exclusion of locations.

Analytical procedures may be particularly effective when disaggregated data is readily available, or when the assurance practitioner has reason to consider the data to be used is reliable, such as when it is extracted from a well-controlled source.

Procedures Regarding Estimates (Ref: Para. 49L-50R)

In some cases, it may be appropriate for the assurance practitioner to evaluate how the responsible party has considered alternative assumptions or outcomes, and why it has rejected them.

In some limited assurance engagements, it may be appropriate for the assurance practitioner to undertake one or more of the procedures identified in paragraph SOR.

Procedures Related to the Future Prospects Note (Ref: Para. 51)

AWAS I requires information to be disclosed in the notes in the general purpose water accounting report that assists users of the report to understand the future prospects of the water report entity.

Disclosures about the future prospects of the water report entity include estimates of expected inflows, under various climatic conditions, and expected settlements of water liabilities and future water commitments. Estimation involves judgement based on information available when the general purpose water accounting report is prepared. Many estimates also include assumptions about matters that are uncertain at the time of estimation. The assurance practitioner is not responsible for predicting future conditions or events that, if known at the time of the assurance engagement, might have significantly affected the actions of the entity or the assumptions made in preparing the general purpose water accounting report.

The assurance practitioner's procedures in relation to estimates are described at paragraphs 49L-50R.

In considering the reasonableness of assumptions, the assurance practitioner may enquire of, and discuss with, management the following:

1. The nature of the assumptions, including which assumptions are likely to be significant assumptions.
2. How management assesses whether the assumptions are relevant and complete.
3. Where applicable, how management determines that the assumptions used are internally consistent.
4. Whether the assumptions relate to matters that are within the control of management, or to matters that are outside its control.
5. The nature and extent of documentation, if any, supporting the assumptions.

Procedures Related to Unaccounted-for Differences (Ref: Para. 52)

AWAS 1 requires information to be disclosed in the notes to the general purpose water accounting report that is relevant to an understanding of the water assets and water liabilities of the water report entity and the management of those water assets and water liabilities, even where it is not explicitly required in AWAS 1.

In considering the reasonableness of an unaccounted-for difference in the general purpose water accounting report, if any, the assurance practitioner may enquire of, and discuss with, management the following:

1. The possible causes of the unaccounted-for difference, including the actions taken by management to identify and fully understand all the causes of the unaccounted-for difference.
2. Whether the possible causes of the unaccounted-for difference relate to matters that are within the control of management, or to matters that are outside its control.

3. Whether management considers the unaccounted-for difference to be as expected or whether it may be indicative of a deficiency in the systems and processes for water accounting and reporting.
4. The pattern of unaccounted-for differences over time.
5. Whether the unaccounted-for difference is expected to continue in future reporting periods.

6. The nature and extent of documentation and other evidence, if any, supporting the disclosures regarding the unaccounted-for difference.

Information Prepared Using the Work of a Management's Expert (Ref: Para. 53)

The responsible party may use the work of a management's expert to assist them in preparing the general purpose water accounting report. For example, expertise may be required to estimate or calculate the volumes of certain water assets, water liabilities or changes to water assets and water liabilities. Where the assurance practitioner intends to use information prepared by a management's expert as assurance evidence, the assurance practitioner may need to perform further procedures to establish the reliability of that information for such purposes.

The nature, timing and extent of further procedures relating to information prepared using the work of a management's expert may be affected by such matters as:

1. The nature and complexity of the matter to which the information relates.
2. The risks of material misstatement in the matter.
3. The availability of alternative sources of assurance evidence.
4. The extent to which the responsible party exercises control or influences the work of the management's expert.
5. The nature and extent of any controls implemented by the responsible party around using the management expert's work.

In obtaining an understanding of the work of the management's expert, the assurance practitioner may consider:

1. The relevant field of expertise and any areas of speciality within that field that are relevant to the assurance engagement.
2. Whether any professional or other standards, and regulatory or legal requirements, apply.

3. What assumptions and methods are used by the management's expert, and whether they are generally accepted within that expert's field and appropriate for water accounting purposes.
4. The nature of internal and external data or information the management's expert uses.

Considerations when evaluating the appropriateness of the management's expert's work as assurance evidence may include:

1. The relevance and reasonableness of that expert's findings or conclusions, their consistency with other assurance evidence, and whether they have been appropriately reflected in the general purpose water accounting report.
2. If the work involves use of significant assumptions and methods, the relevance and reasonableness of those assumptions and methods.
3. If the work involves significant use of source data, the relevance, completeness and accuracy of that source data.

Sampling (Ref: Para. 54)

Sampling involves:

1. Determining a sample size sufficient to reduce sampling risk to an acceptably low level. Because the acceptable level of assurance engagement risk is lower for a reasonable assurance engagement than for a limited assurance engagement, so too may be the level of sampling risk that is acceptable in the case of tests of details.

Therefore, when sampling is used for tests of details in a reasonable assurance engagement, the sample size may be larger than when used in similar circumstances in a limited assurance engagement.

2. Selecting items for the sample in such a way that each sampling unit in the population has a chance of selection, and performing procedures, appropriate to the purpose, on each item selected. If the assurance practitioner is unable to apply the designed procedures, or suitable alternative procedures, to a selected item, that item is treated as a deviation from the prescribed control, in the case of tests of controls, or a misstatement, in the case of tests of details.
3. Investigating the nature and cause of deviations or misstatements identified, and evaluating their possible effect on the purpose of the procedure and on other areas of the engagement.
4. Evaluating:
   1. The results of the sample, including, for tests of details, projecting misstatements found in the sample to the population; and

1. 2. Whether the use of sampling has provided an appropriate basis for conclusions about the population that has been tested.

Fraud, Law and Regulation (Ref: Para. 55)

In responding to fraud or suspected fraud identified during the engagement, it may be appropriate for the assurance practitioner to, for example:

1. Discuss the matter with the responsible party.
2. Request the responsible party to consult with an appropriately qualified third party, such as the its legal counsel or a regulator.
3. Consider the implications of the matter in relation to other aspects of the engagement, including the assurance practitioner's risk assessment and the reliability of written representations from the responsible party.
4. Obtain legal advice about the consequences of different courses of action.
5. Communicate with third parties (for example, a regulator).
6. Withhold the assurance report.
7. Withdraw from the engagement.

The actions noted in paragraph Al 10 may be appropriate in responding to non-compliance or suspected non-compliance with law and regulation identified during the engagement. It may also be appropriate to describe the matter in an Other Matter paragraph in the assurance report in accordance with paragraph 104 of this Standard, unless the assurance practitioner:

1. Concludes that the non-compliance has a material effect on the general purpose water accounting report and has not been adequately reflected in the general purpose water accounting report; or

2. Is precluded by the responsible party from obtaining sufficient appropriate evidence to evaluate whether non-compliance that may be material to the general purpose water accounting report has, or is likely to have, occurred, in which case paragraph 66 of ASAE 3000 applies.

Procedures Regarding the General Purpose Water Accounting Report Aggregation Process (Ref: Para. 56L-56R)

As noted in paragraph A63, as water accounting and reporting evolves, it can be expected that so too will the level of sophistication, documentation and formality of related water information systems. In immature water information systems, the aggregation process may be very informal. In more sophisticated  systems, the aggregation  process may be more systematic and formally documented. The nature, and also the extent, of the assurance practitioner's procedures with respect to adjustments and obtaining evidence that the general purpose water accounting report agrees with, or reconciles to, the underlying records depends on the nature and complexity of the water accounting and reporting process and the related risks of material misstatement.

Additional Procedures (Ref: Para. 57L-57R)

An assurance engagement is an iterative process, and information may come to the assurance practitioner's attention that differs significantly from that on which the determination of planned procedures was based. As the assurance practitioner performs planned procedures, the evidence obtained may cause the assurance practitioner to perform additional procedures. Such procedures may include asking the responsible party to examine the matter(s) identified by the assurance practitioner, and to make adjustments to the general purpose water accounting report if appropriate.

Determining Whether Additional Procedures Are Necessary in a Limited Assurance Engagement (Ref: Para. 57L)

The assurance practitioner may become aware of a matter(s) that causes the assurance practitioner to believe the general purpose water accounting report may be materially misstated. For example, when performing site visits, the assurance practitioner may identify water assets or water liabilities which do not appear to be included in the general purpose water accounting report. In such cases the assurance practitioner makes further enquiries as to whether the water assets or water liabilities have been incorporated into the general purpose water accounting report. The extent of additional procedures performed, in accordance with paragraph 57L will be a matter of professional judgement. The greater the likelihood of material misstatement the more persuasive the evidence the assurance practitioner obtains.

If, in the case of a limited assurance engagement, a matter(s) comes to the assurance practitioner's attention that causes the assurance practitioner to believe the general purpose water accounting report may be materially misstated, the assurance practitioner is required by paragraph 57L to design and perform additional procedures. If having done so, however, the assurance practitioner is not able to obtain sufficient appropriate evidence to either conclude that the matter(s) is not likely to cause the general purpose water accounting report to be material misstated or determine that it does cause the general purpose water accounting report to be materially misstated, a scope limitation exists.

Accumulation of Identified Misstatements (Ref: Para. 58)

The assurance practitioner may designate an amount below which misstatements would be clearly trivial and would not need to be accumulated because the assurance practitioner expects that the accumulation of such amounts clearly would not have a material effect on the general purpose water accounting report. "Clearly trivial" is not another expression for "not material". Matters that are clearly trivial will be of a wholly different (smaller) order of magnitude than materiality determined in accordance with this Standard, and will be matters that are clearly inconsequential, whether taken individually or in the aggregate and whether judged by any criteria of size, nature or circumstances. When there is any uncertainty about whether one or more items are clearly trivial, the matter is considered not to be clearly trivial.

Opening Balances (Ref: Para. 65-67)

The nature and extent of assurance procedures necessary to obtain sufficient appropriate assurance evidence regarding opening balances depend on such matters as:

1. The water accounting policies followed by the responsible party.
2. The nature of the account balances, and disclosures and the risks of material misstatement in the current period's general purpose water accounting report.
3. The significance of the opening balances relative to the current period's general purpose water accounting report.
4. Whether the prior period general purpose water accounting report was assured and, if so, whether the predecessor assurance practitioner's opinion was modified.

Where the prior year general purpose water accounting report was assured by a predecessor assurance practitioner, a review of the predecessor assurance practitioner's working papers may provide sufficient, appropriate assurance evidence. This will be influenced by the professional competence and independence of the predecessor assurance practitioner.

Effect on the Assurance Report (Ref: Para.68-70)

In some situations, a modification to the predecessor assurance practitioner's conclusion may not be relevant and material to the conclusion on the current period general purpose water accounting report. This may be the case where, for example, there was a scope limitation in the prior period, but the matter giving rise to the scope limitation has been resolved in the current period.

Communication to Another Assurance Practitioner (Ref: Para. 71(a))

Relevant matters that the engagement team may communicate to another assurance practitioner in respect of the work to be performed, the use to be made of that work, and the form and content of the other assurance practitioner's communication with the engagement team may include:

1. A request that the other assurance practitioner, knowing the context in which the engagement team will use the work of the other assurance practitioner, confirms that the other assurance practitioner will cooperate with the engagement team.
2. Performance materiality for the work of the other assurance practitioner,  which may be lower than performance materiality for the general purpose water accounting report (and, if applicable, the materiality level or levels for particular types of water assets, water liabilities, changes to water assets and water liabilities or disclosures) and the threshold above which misstatements cannot be regarded as clearly trivial to the general purpose water accounting report.
3. Identified risks of material misstatement of the general purpose water accounting report that are relevant to the work of the other assurance practitioner; and a request that the other assurance practitioner communicate on a timely basis any other risks identified during the engagement that may be material to the general purpose water accounting report, and the other assurance practitioner's responses to such risks.

Communication from Another Assurance Practitioner (Ref: Para. 71(a))

1. The other assurance practitioner's overall findings, conclusion or opinion.

Evidence (Ref: Para. 71(b)

Relevant considerations when obtaining evidence regarding the work of another assurance practitioner may include:

1. Discussions with the other assurance practitioner regarding business activities relevant to that other assurance practitioner's work that are significant to the general purpose water accounting report.
2. Discussions with the other assurance practitioner regarding the susceptibility of relevant information to material misstatement.
3. Reviewing the other assurance practitioner's documentation of identified risks of material misstatement, responses to those risks, and conclusions. Such documentation may take the form of a memorandum that reflects the other assurance practitioner's conclusion with regard to the identified risks.

Determining the Need for an Assurance Practitioner's Expert (Ref: Para. 72)

Expertise in a field other than water accounting or assurance may include expertise in relation to such matters as the:

1. Estimation of groundwater volumes.
2. Estimation of water consumption by flood plains and wetlands.
3. Review of decisions regarding changes to rating tables for flow gauges.
4. Choice of quantification approaches for particular water assets, water liabilities or changes to water assets and water liabilities.

An assurance practitioner's expert may be needed to assist the assurance practitioner in one or more of the following areas of the assurance engagement:

1. Obtaining an understanding of the water report entity and its circumstances, including internal control relevant to preparing the general purpose water accounting report;
2. Identifying and assessing the risks of material misstatement;
3. Determining and implementing overall responses and further procedures relating to assessed risks of material misstatement;
4. Evaluating the sufficiency and appropriateness of assurance evidence in forming a conclusion on the general purpose water accounting report.

The assurance practitioner's determination of whether to use the work of an assurance practitioner's expert, and if so, when and to what extent, assists the assurance practitioner in meeting the requirements under paragraphs 17(b) and 24(e) of this Standard to ensure the engagement team has appropriate skills, knowledge and experience and to plan the resources necessary to perform the assurance engagement.

3. The risks of material misstatement in the matter; and
4. The expected nature of procedures to respond to identified risks, including the assurance practitioner's knowledge of and experience with the work of experts in relation to such matters; and the availability of alternative sources of assurance evidence.

The Competence, Capabilities and Objectivity of the Assurance Practitioner's Expert (Ref: Para. 73-74)

Competence  relates to the nature and level of expertise of the assurance practitioner's expert. Capability relates to the ability of the assurance practitioner's expert to exercise that competence in the circumstances of the engagement. Objectivity relates to the possible effects that bias, conflict of interest, or the influence of others may have on the professional or business judgement of the assurance practitioner's expert.

In evaluating the competence, capability and objectivity of an assurance practitioner's expert, the assurance practitioner may consider:

1. Whether that expert's work is subject to technical performance standards or other professional or industry requirements, for example, ethical standards, professional development or other membership requirements of a professional body or industry association, accreditation standards of a licensing body, or requirements imposed by law or regulation;
2. The qualifications of that expert;

3. Whether that expert's field of expertise has areas of speciality within it that are relevant to the assurance engagement;
4. What assumptions and methods, including models, where applicable, are used by the assurance practitioner's expert, and whether they are generally accepted within. that expert's field and appropriate for water accounting and reporting purposes; and
5. The nature of internal and external data or information that expert uses.

Agreement with the Assurance Practitioner's Expert (Ref: Para. 75)

The following factors may suggest the need for a more detailed agreement between the assurance practitioner and the assurance practitioner's expert than would otherwise be the case, or for the agreement to be set out in writing:

1. The assurance practitioner's expert will have access to sensitive or confidential information.

2. The respective roles or responsibilities of the assurance practitioner and the assurance practitioner's expert are different from those normally expected.
3. Multi-jurisdictional legal or regulatory requirements apply.
4. The matter to which the assurance practitioner's expert's work relates is highly complex.
5. The assurance practitioner has not previously used work performed by that expert.

6. The greater the extent of the assurance practitioner's expert's work, and its significance in the context of the assurance engagement.

The agreement between the assurance practitioner and an assurance practitioner's external expert is often in the form of an engagement letter.

2. The policies and procedures of the assurance practitioner's firm.

Nature, Scope and Objectives of Work (Ref: Para. 75(a))

It may often be relevant when agreeing on the nature, scope and objectives of the assurance practitioner's expert's work to include discussion of any relevant technical performance standards or other professional or industry requirements that the expert will follow.

Respective Roles and Responsibilities (Ref: Para. 75(b))

Agreement on the respective roles and responsibilities of the assurance practitioner and the assurance practitioner's expert may include:

1. Whether the assurance practitioner or the assurance practitioner's expert will perform detailed testing of source data.

2. Consent for the assurance practitioner to discuss the assurance practitioner's expert's findings or conclusions with the responsible party and others, and to include details of that expert's findings or conclusions in the basis for a modified opinion in the assurance practitioner's report, if necessary (see paragraph Al46).

3. Any agreement to inform the assurance practitioner's expert of the assurance practitioner's conclusions concerning that expert's work.

Working Papers

Agreement on the respective roles and responsibilities of the assurance practitioner and the assurance practitioner's expert may also include agreement about access to, and retention of, each other's working papers.

Communication (Ref: Para. 75(c))

Effective two-way communication facilitates the proper integration of the nature, timing and extent of the assurance practitioner's expert's procedures with other work on the assurance engagement, and appropriate modification of the assurance practitioner's expert's objectives during the course of the engagement. For example, when the work of the assurance practitioner's expert relates to the assurance practitioner's conclusions regarding a significant risk, both a formal written report at the conclusion  of that expert's work, and oral reports as  the work progresses, may be appropriate. Identification of specific team members who will liaise with the assurance practitioner's expert, and procedures for communication between that expert and the responsible party, assists timely and effective communication, particularly on larger engagements.

Confidentiality (Ref: Para. 75(d))

It is necessary for the confidentiality provisions of relevant ethical requirements that apply to the assurance practitioner also to apply to the assurance practitioner's expert. Additional requirements may be imposed by law or regulation. The responsible party may also have requested that specific confidentiality provisions be agreed with the assurance practitioner's expert.

Evaluating the Adequacy of the Assurance Practitioner's Expert's Work (Ref: Para. 76)

3. 2. Examining published data, such as statistical reports from reputable, authoritative sources;
   3. Confirming relevant matters with third parties;
   4. Performing detailed analytical procedures; and
   5. Re-performing calculations.
4. Discussion with another expert with relevant expertise when, for example, the findings or conclusions of the assurance practitioner's expert are not consistent with other assurance evidence.
5. Discussing the assurance practitioner's expert's report with the responsible party.

Relevant factors when evaluating the relevance and reasonableness of the findings or conclusions of the assurance practitioner's expert, whether in a report or other form, may include whether they are:

1. Presented in a manner that is consistent with any standards of the assurance practitioner's expert's profession or industry;
2. Clearly expressed, including reference to the objectives agreed with the assurance practitioner, the scope of the work performed and standards applied;
3. Based on an appropriate period and take into account events after the reporting date, where relevant;
4. Subject to any reservation, limitation or restriction on use, and if so, whether this has implications for the assurance practitioner; and
5. Based on appropriate consideration of errors or deviations encountered by the assurance practitioner's expert.

Assumptions and Methods

When the assurance practitioner's expert's work is to evaluate underlying assumptions and methods, including models where applicable, used by the responsible party in developing an estimate, the assurance practitioner's procedures are likely to be primarily  directed to evaluating whether the assurance practitioner's expert has adequately reviewed those assumptions and methods. In other  circumstances, the  assurance  practitioner's procedures may be primarily directed to evaluating the assumptions and methods, including models where appropriate, used by the assurance practitioners' expert.

When an assurance practitioner's expert's work involves the use of significant assumptions  and methods, factors relevant to the assurance practitioner's evaluation of those assumptions and methods include whether they are:

1. Generally accepted within the assurance practitioner's expert's field;
2. Consistent with the requirements of AWAS 1;
3. Dependent on the use of specialised models; and
4. Consistent with those of the responsible party, and if not, the reason for, and effects of, the differences.

Source Data Used by the Assurance Practitioner's Expert

1. Verifying the origin of the data, including obtaining an understanding of, and where applicable testing, the internal controls over the data and, where relevant, its transmission to the expert.
2. Reviewing the data for completeness and internal consistency.

In many cases, the assurance practitioner may test source data. However, in other cases, when the nature of the source data used by an assurance practitioner's expert is highly technical in relation to the expert's field, that expert may test the source data.  If  the  assurance practitioner's expert has tested the source data, enquiry of that expert by the assurance practitioner, or supervision or review of that expert's tests may be an appropriate way for the assurance practitioner to evaluate that data's relevance, completeness, and accuracy.

Inadequate Work (Ref: Para. 77)

If  the assurance  practitioner concludes  that the work of the assurance practitioner's expert is not adequate for the assurance practitioner's purposes and the assurance practitioner cannot resolve the matter through the additional assurance procedures required by paragraph 77, which may involve further work being performed by both the expert and the assurance practitioner, or include employing or engaging another expert, it may be necessary to express a modified conclusion in the assurance practitioner's report because the assurance practitioner has not obtained sufficient appropriate assurance evidence.

Reference to the Assurance Practitioner's Expert in the Assurance Practitioner's Report (Ref: Para. 78-79)

The assurance practitioner has sole responsibility for the assurance conclusion expressed, and that responsibility is not reduced by the assurance practitioner's expert.

Where reference is made to the assurance practitioner's expert in an assurance practitioner's report containing a modified conclusion, the assurance practitioner may need the permission of the assurance practitioner's expert before making such a reference.

In addition to the written representations required by paragraph 80, the assurance practitioner may consider it necessary to request other written representations. While, the person(s) from whom the assurance practitioner requests written representations will ordinarily be a member of senior management or those charged with governance, management and governance structures may vary between entities. Accordingly, it is not possible for this Standard to specify for all engagements the appropriate person(s) from whom to request written representations. Identifying the appropriate management personnel or those charged with governance from whom to request written representations may require the exercise of professional judgement.

Subsequent events may include, for example, the publication of revised streamflow data by a body such as a government agency, changes to relevant legislation or regulations, improved scientific knowledge, significant structural changes in the water report entity, the availability of more accurate quantification approaches, or the discovery of a significant error.

Restatements (Ref: Para. 84(a))

The water assets, water liabilities and changes to water assets and water liabilities reported in a prior period may need to be restated in accordance with the applicable criteria because of, for example, improved scientific knowledge, significant structural changes in the water report entity, the availability of more accurate quantification approaches, or the discovery of a significant error

Performing Procedures on Comparative Information (Ref: Para. 84-85)

The assurance engagement does not include assurance on comparative information, unless the terms of the assurance engagement specify otherwise. The requirements  in paragraphs 84-85 to perform procedures with respect to comparative information are to satisfy the assurance practitioner's ethical obligations to not knowingly be associated with materially false or misleading information.

In a limited assurance engagement, if the assurance practitioner becomes aware that there may be a material misstatement in the comparative information presented, the procedures to be performed are to be in accordance with the requirements of paragraph 57L.

In a reasonable assurance engagement, if the assurance practitioner becomes aware that there may be a material misstatement in the comparative information presented, the procedures to be performed are to be sufficient to determine whether a material misstatement exists. If the assurance practitioner assured the prior period general purpose water accounting report, the procedures in paragraph 83 need to be considered.

Modification in Assurance Practitioner's Report on the Prior Period Unresolved (Ref: Para. 87)

When the assurance practitioner's report on the prior period, as previously issued, included a qualified conclusion, a disclaimer of conclusion, or an adverse conclusion and the matter which gave rise to the modified conclusion is resolved and properly accounted for or disclosed in the general purpose water accounting report in accordance with the applicable criteria, the assurance practitioner's conclusion on the current period need not refer to the previous modification.

When the assurance practitioner's conclusion on the prior period, as previously expressed, was modified, the unresolved matter that gave rise to the modification may not be relevant to the current period figures. Nevertheless, a qualified conclusion, a disclaimer of conclusion, or an adverse conclusion (as applicable) may be required on the current period's general purpose water accounting report because of the effects or possible effects of the unresolved matter on the comparability of the current and corresponding figures.

Misstatement in Prior Period General Purpose Water Accounting Report (Ref: Para. 88)

When a prior period general purpose water accounting report that is misstated has not been amended and an assurance practitioner's report has not been reissued, but the corresponding figures have been properly restated or appropriate disclosures have been made in the current period general purpose  water accounting report, the assurance practitioner's report may include an Emphasis of Matter paragraph describing the circumstances and referring to, where relevant, disclosures that fully describe the matter that can be found in the general purpose water accounting report.

Prior Period General Purpose Water Accounting Report Assured by a Predecessor Assurance Practitioner (Ref: Para. 89)

When the prior period general purpose water accounting report was assured by a predecessor assurance practitioner, and the assurance conclusion was unmodified, the assurance practitioner would not ordinarily include a reference to that predecessor assurance practitioner's conclusion in the assurance practitioner's report. If the predecessor assurance practitioner's report was modified, the assurance practitioner considers the appropriateness of including a reference to that predecessor assurance practitioner's conclusion in the assurance practitioner's report.

A general purpose water accounting report may be published with other information that is not covered by the assurance practitioner's conclusion, for example, the contextual statement or a sustainability report. The assurance practitioner reads the other information to identify material inconsistencies between the other information and the general purpose water accounting report or material misstatements of fact.

An agreement with the responsible party about when the contextual statement and other information, if any, will be available may be helpful, as this enables the assurance practitioner to read the contextual statement and other information and resolve possible issues on a timely basis.

Material Inconsistencies

If, on reading other information, the assurance practitioner identifies a material inconsistency between the other information and the general purpose water accounting report, further actions may include:

1. Determining whether the general purpose water accounting report or the other information need to be revised and asking the responsible party to make the necessary revision;
2. If the responsible party refuses to make the revision, the assurance practitioner may modify the assurance report, for example, by including in the assurance report an Other Matter(s) paragraph describing the material inconsistency;
3. Withholding the assurance report; or
4. Withdrawing from the engagement, where withdrawal is possible.

Material Misstatements of Fact

If, on reading other information, the assurance practitioner becomes aware of an apparent material misstatement of fact, the assurance practitioner may discuss the matter with the responsible party, When discussing an apparent material misstatement of fact with the responsible party, the assurance practitioner may not be able to evaluate the validity of some disclosures in the other information and the responsible party's responses to the assurance practitioner's enquiries, and may conclude that valid differences of judgement or opinion exist

If following such discussions, the assurance practitioner still considers that there is an apparent material misstatement of fact, the assurance practitioner may request the responsible party to consult with a third party, such as legal counsel, to assist in resolving the apparent material misstatement of fact. The assurance practitioner can then consider the advice received.

When the assurance practitioner concludes that there is a material misstatement of fact that the responsible party refuses to correct, appropriate further actions by the assurance practitioner may include:

1. Obtaining legal advice about the consequences of different courses of action;
2. Communicating with third parties, for example, a regulator; or

3. Including an Other Matter(s) paragraph in the assurance report, describing the material misstatement of fact in the other information.

Documentation of the Procedures Performed and Evidence Obtained (Ref: Para, 16, 92-93)

1. Fraud: The risks of material misstatement and the nature, timing and extent of procedures with respect to fraud; and communications about fraud made to the responsible party, regulators and others.

2. Law or Regulation: Identified or suspected non-compliance with law or regulation and the results of discussion with the responsible party and other relevant parties.

3. Planning: The overall engagement strategy, the engagement plan, and any significant changes made during the engagement and the reasons for such changes.
4. Materiality: The following amounts and the factors considered in their determination: materiality for the general purpose water accounting report; if applicable, the materiality level or levels for particular types of water assets, water liabilities, changes to water assets and water liabilities or disclosures; performance materiality; and any revision of materiality as the engagement progresses.

5. Risks of Material Misstatement: The discussion required by paragraph 34, and the significant decisions reached, key elements of the understanding obtained regarding each of the aspects of the water report entity and its circumstances specified in paragraph 28, and the risks of material misstatement for which in the assurance practitioner's professional judgement further procedures were required.

6. Further Procedures: The nature, timing and extent of the further procedures performed, the linkage of those further procedures with the risks of material misstatement, and the results of the procedures.
7. Evaluation of Misstatements: The amount below which misstatements would be regarded as clearly trivial, misstatements accumulated during the engagement and whether they have been corrected, and the assurance practitioner's conclusion as to whether uncorrected misstatements are material, individually or in the aggregate, and the basis for that conclusion.

Matters Arising after the Date of the Assurance Report (Ref: Para. 95)