This ASAE deals with direct engagements in which an assurance practitioner evaluates a responsible party or parties’ performance of an activity (hereafter referred to as an ‘activity’s performance’) against identified criteria and aims to obtain sufficient appropriate evidence to express, in a written direct assurance report, a conclusion to intended users about the outcome of the evaluation. (Ref: Para A1)

This ASAE includes requirements and application and other explanatory material for reasonable and limited assurance performance engagements. Unless otherwise stated, each requirement of this ASAE applies to both reasonable and limited assurance engagements. Because the level of assurance obtained in a limited assurance engagement is lower than in a reasonable assurance engagement, the procedures the assurance practitioner performs in a limited assurance engagement will vary in nature and timing from, and are less in extent than for, a reasonable assurance engagement. Requirements and Application and Other Explanatory Material that apply only to limited assurance or reasonable assurance engagements have been presented with the letter “L” (limited assurance) or “R” (reasonable assurance) after the paragraph number. Although some procedures are required only for reasonable assurance engagements, they may nonetheless be appropriate in some limited assurance engagements. (Ref: Para A2)

This ASAE addresses assurance engagements on performance:

1. of all or part of any activity, whether within an entity or across multiple entities; (Ref: Para A3-A4)
2. evaluated against identified criteria selected or developed by the assurance practitioner or the engaging party; and
3. for either restricted use by the engaging party or specified third parties, or to be publicly available through tabling in Parliament or other means of distribution.

Other frequently performed engagements that are not assurance engagements and, therefore, are not covered by this ASAE, include:

1. Agreed-upon procedures engagements^[2], where procedures are conducted and factual findings are reported but no assurance conclusion is provided, and
2. Consulting engagements^[3], for the purpose of providing advice on performance but no assurance conclusion is provided.

The essential elements of performance engagements are: (Ref: Appendix 1 and Appendix 2)

1. a three party relationship involving:
   1. an assurance practitioner who may be a State, Territory or Commonwealth Auditor‑General;
   2. a responsible party or a number of responsible parties involved in the activity’s performance; and 
   3. intended users of the assurance report, which may include the responsible party, Parliament and the general public;
2. an appropriate activity’s performance (the subject matter);
3. suitable criteria;
4. sufficient appropriate evidence; and
5. a written assurance report.

Performance engagements are most commonly conducted on activities delivered or controlled by the Government. Performance engagements generally focus on one or more of the principles of economy, efficiency, effectiveness, and/or ethics; however, may also focus on performance principles such as equity, probity and sustainability, amongst others. (Ref: Para A3-A5)

Performance engagements are usually initiated by a State, Territory or the Commonwealth Auditor-General and will not involve an engaging party. The authority of an Auditor-General to conduct a performance engagement derives from their legislative mandate, consequently the party responsible for the activity does not initiate the performance engagement and their agreement to the terms of engagement may not be required. The scope of a performance engagement is generally determined by an Auditor-General. The roles and responsibilities of the parties to a performance engagement initiated by an Auditor-General are illustrated in Appendix 3. (Ref: Para A9, A10)

Performance engagements may also be accepted by a private sector assurance practitioner from an engaging party in the private or public sector. In these circumstances, the scope of the performance engagement is determined by the engaging party based on the information needs of the engaging party and other identified users.

This ASAE adapts the requirements in ASAE 3000^[4], which is written primarily for attestation engagements, as necessary, to direct engagements on performance and identifies the requirements of ASAE 3000 which the assurance practitioner is required to comply with in conducting a performance engagement in addition to the requirements of this ASAE.^[5]   The Framework for Assurance Engagements, which defines and describes the elements and objectives of an assurance engagement, provides the context for understanding this ASAE and ASAE 3000.

This ASAE requires the assurance practitioner to apply the ASAE 3000 requirement to comply with relevant ethical requirements related to assurance engagements, or other professional requirements, or requirements imposed by law or regulation, that are at least as demanding. It also requires the Audit Office of an Auditor-General to apply ASQM 1^[6] or the assurance practitioner to be a member of a firm that applies ASQM 1 or other professional requirements, or requirements in law or regulation, that are at least as demanding as ASQM 1.

An assurance engagement performed under this ASAE may be part of a larger engagement. If multiple standards are applicable to the assurance engagement, the assurance practitioner applies, either:

1. if the engagement can be separated into sections, the standard relevant to each section of the engagement, including this ASAE for the section on performance; or
2. if the engagement cannot be separated into sections, the standard which is most directly relevant to the subject matter.

In circumstances when an assurance engagement performed under this ASAE includes a compliance section, the assurance practitioner applies both ASAE 3100^[7] and ASAE 3500, as applicable, in conducting the assurance engagement.

Assurance conclusions on performance may be required by Parliament, legislation, industry bodies or other users in conjunction with assurance conclusions on historical financial statements, other historical financial information, compliance, controls and/or other subject matters. In these performance engagements, the subject matter, identified criteria against which that subject matter is evaluated and the level of assurance sought may vary, in which case different standards will apply. Assurance reports can include separate sections for each subject matter, identified criteria or level of assurance, in order that the different matters to be concluded upon are clearly differentiated.

A table showing the AUASB Standards that apply to certain engagements, depending on the subject matter and engagement circumstances, is contained in Appendix 4.