For the purposes of this ASAE, the following terms have the meanings attributed below:

Activity―An aspect of an entity’s operations such as the achievement of strategic objectives or legislative requirements or the delivery of a product, service or programme. An activity may be conducted within a single entity or across multiple entities, departments, agencies, joint ventures or other organisations, within a single jurisdiction or across multiple jurisdictions. (Ref: Para A3-A4)

Activity’s performance—The responsible party or parties’ performance of the activity being reported on (that is, the subject matter for the performance engagement).

Assurance practitioner―Individual or firm or other organisation, whether in public practice, industry and commerce or the public sector, providing assurance services including performance engagements.

Attestation engagement―An assurance engagement in which a party other than the assurance practitioner measures or evaluates the underlying subject matter against the criteria. A party other than the assurance practitioner also often presents the resulting subject matter information in a report or statement. In some cases, however, the subject matter information may be presented by the assurance practitioner in the assurance report. In an attestation engagement, the assurance practitioner’s conclusion addresses whether the subject matter information is free from material misstatement.^[8] (Ref: Para A1)

Criteria―The benchmarks used to evaluate the activity’s performance. The “identified criteria” are the criteria used for the particular engagement. (Ref: Para 27)

Direct engagement on performance―An assurance engagement in which the assurance practitioner obtains sufficient appropriate evidence to evaluate an activity’s performance (the subject matter) against identified criteria. The outcome of this evaluation, that is, the resulting subject matter information (for example, the assurance practitioner’s analysis and findings) is presented as part of, or accompanying, the assurance report. In a direct engagement, the assurance practitioner’s conclusion addresses the reported outcome of the evaluation of the subject matter against the criteria.^[9] (Ref: Para A1)

Engagement objective (objective of the performance engagement)―States the purpose of the performance engagement. The engagement objective needs to be expressed in a way that makes it possible to conclude against the objective after the engagement has been finalised.^[10] (Ref: Para A27-A30)

Engagement risk―The risk that the assurance practitioner expresses an inappropriate conclusion.^[11]

Engaging party―The party(ies) that engages the assurance practitioner to perform the assurance engagement. In a performance engagement initiated by an Auditor-General there will not normally be an engaging party as the State, Territory or Federal Parliament provide the mandate for the Auditor-General to conduct performance engagements, but will not usually engage the Auditor-General to perform specific performance engagements.

Further procedures—Procedures, including tests of controls and substantive procedures, performed to: (Ref: Para 41-46)

1. In a limited assurance engagement, respond to the identified areas where a significant variation in an activity’s performance is likely to arise; and
2. In a reasonable assurance engagement, respond to the risks that may cause significant variations in an activity’s performance.

Intended users―Parliament and the responsible party(ies), as well as organisations, groups or individuals that the assurance practitioner expects will use the assurance report. If the assurance report is publicly available, intended users includes the public.

Limited assurance engagement―An assurance engagement in which the assurance practitioner reduces engagement risk to a level that is acceptable in the circumstances of the engagement, but where that risk is greater than for a reasonable assurance engagement as the basis for the assurance practitioner’s conclusion. The assurance practitioner’s conclusion is expressed in a form that conveys whether, based on the procedures performed and evidence obtained, a matter(s) has come to the assurance practitioner’s attention to cause the assurance practitioner to believe that the responsible party(ies) did not perform the activity in accordance with the identified criteria. The nature, timing and extent of procedures performed in a limited assurance engagement is limited compared with that necessary in a reasonable assurance engagement but is planned to obtain a level of assurance that is, in the assurance practitioner’s professional judgement, meaningful. To be meaningful, the level of assurance obtained by the assurance practitioner is likely to enhance the intended users’ confidence about the activity’s performance to a degree that is clearly more than inconsequential. For further information on the nature, timing and extent of procedures in a limited assurance engagement and the concept of ‘meaningful assurance’, refer to ASAE 3000^[12] (Ref: Para A2, A100).

Performance engagement―An assurance engagement that concludes on all or a part of an activity’s performance as evaluated against identified criteria. Performance engagements generally focus on one or more performance principle (see 18(n) below). Performance engagements seek to provide new information, analysis or insights and, where appropriate, recommendations for improvement^[13].

Performance principle—The specific aspect of performance being evaluated against the engagement objective. 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 A5)

Professional scepticism―An attitude that includes a questioning mind, being alert to the validity of evidence obtained and critically assessing evidence that contradicts or brings into question the reliability of information obtained. Information may include data, documents and responses to enquiries.

Reasonable assurance engagement―An assurance engagement in which the assurance practitioner reduces engagement risk to an acceptably low level in the circumstances of the engagement as the basis for the assurance practitioner’s conclusion. The assurance practitioner’s conclusion is expressed in a form that conveys the assurance practitioner’s conclusion on the outcome of the evaluation of the activity’s performance against the identified criteria.

Representation―Statement by the responsible party(ies), either oral or written, provided to the assurance practitioner to confirm certain matters or to support other evidence.

Responsible party―The party or parties responsible for the performance of all or part of the activity, which is the subject matter of the performance engagement.

Risk procedures—Procedures designed and performed to: (Ref: Para 36-40)

1. In a limited assurance engagement, identify areas where a significant variation in an activity’s performance is likely to arise; and
2. In a reasonable assurance engagement, identify and assess the risks that may cause significant variations in an activity’s performance.

Significance^[14]—The relative importance of a matter, within the context in which it is being considered, that could potentially influence the decisions of the intended users of the assurance report. (Ref: Para 31-33)

Subject matter—The phenomenon that is measured or evaluated by applying criteria.^[15] In the context of a performance engagement the subject matter is the responsible party or parties’ performance of an activity as evaluated against the identified criteria.

Variation—An instance where the actual performance of the activity varies from the identified criteria.