For purposes of this ASQM, the following terms have the meanings attributed below:
Assurance engagement means an engagement in which an assurance practitioner expresses a conclusion designed to enhance the degree of confidence of the intended users, other than the responsible party, about the outcome of the evaluation or measurement of a subject matter against criteria.
Assurance practitioner means an individual, firm, or other organisation, whether in public practice, industry and commerce, or the public sector conducting assurance engagements, or related services engagements (including engagements to perform agreed-upon procedures). The term ‘assurance practitioner’ is referred to in ASRS 4400 as ‘practitioner’.
Date of report means the date the assurance practitioner signs the report.
- A quality objective required to achieve the objective of the system of quality management is not established;
- A quality risk, or combination of quality risks, is not identified or properly assessed; (Ref: Para. A11)
- A response, or combination of responses, does not reduce to an acceptably low level the likelihood of a related quality risk occurring because the response(s) is not properly designed, implemented or operating effectively; or
- An other aspect of the system of quality management is absent, or not properly designed, implemented or operating effectively, such that a requirement of this ASQM has not been addressed. (Ref: Para. A12)
Engagement documentation – The record of work performed, results obtained, and conclusions the practitioner reached (terms such as “working papers” or “work papers” are sometimes used).
Engagement partner – The partner or other individual, appointed by the firm, who is responsible for the engagement and its performance, and for the report that is issued on behalf of the firm, and who, where required, has the appropriate authority from a professional, legal or regulatory body.
“Engagement partner” and “partner” is to be read as referring to their public sector equivalents where relevant.
Engagement quality review – An objective evaluation of the significant judgements made by the engagement team and the conclusions reached thereon, performed by the engagement quality reviewer and completed on or before the date of the engagement report.
Engagement quality reviewer – A partner, other individual in the firm, or an external individual, appointed by the firm to perform the engagement quality review.
See ASA 620 Using the Work of an Auditor’s Expert, paragraph 6(a), defines the term “auditor’s expert”.
External inspections – Inspections or investigations, undertaken by an external oversight authority, related to the firm’s system of quality management or engagements performed by the firm. (Ref: Para. A14)
Findings (in relation to a system of quality management) – Information about the design, implementation and operation of the system of quality management that has been accumulated from the performance of monitoring activities, external inspections and other relevant sources, which indicates that one or more deficiencies may exist. (Ref: Para. A15–A17)
Listed entity – An entity whose shares, stock or debt are quoted or listed on a recognised stock exchange, or are marketed under the regulations of a recognised stock exchange or other equivalent body.
Network firm – A firm or entity that belongs to the firm’s network.
Network – A larger structure: (Ref: Para. A19)
- That is aimed at cooperation; and
- That is clearly aimed at profit or cost-sharing or shares common ownership, control or management, common quality management policies or procedures, common business strategy, the use of a common brand name, or a significant part of professional resources.
Other financial information means historical financial information and information other than historical financial information (for example, prospective financial information).
Partner means any individual with authority to bind the firm with respect to the performance of an audit, review, other assurance engagement or related services engagement.
Professional judgement – The application of relevant training, knowledge and experience, within the context of AUASB standards, in making informed decisions about the courses of action that are appropriate in the design, implementation and operation of the firm’s system of quality management.
AUASB Standards means standards issued by the AUASB, comprising:
- Australian Auditing Standards, which means the suite of auditing standards issued by the AUASB, comprising:
- Auditing Standards made under section 336 of the Corporations Act 2001;
- ASA 805 Special Considerations—Audits of Single Financial Statements and Specific Elements, Accounts or Items of a Financial Statement; and
- ASA 810 Engagements to Report on Summary Financial Statements.
- Standards on Review Engagements;
- Standards on Assurance Engagements; and
- Standards on Related Services.
Quality objectives – The desired outcomes in relation to the components of the system of quality management to be achieved by the firm.
Quality risk – A risk that has a reasonable possibility of:
- Occurring; and
- Individually, or in combination with other risks, adversely affecting the achievement of one or more quality objectives.
Reasonable assurance – In the context of the ASQMs, a high, but not absolute, level of assurance.
- Policies are statements of what should, or should not, be done to address a quality risk(s). Such statements may be documented, explicitly stated in communications or implied through actions and decisions.
- Procedures are actions to implement policies.
Service provider (in the context of this ASQM) – An individual or organisation external to the firm that provides a resource that is used in the system of quality management or in the performance of engagements. Service providers exclude the firm’s network, other network firms or other structures or organisations in the network. (Ref: Para. A28, A105)
Staff – Professionals, other than partners, including any experts the firm employs.
System of quality management – A system designed, implemented and operated by a firm to provide the firm with reasonable assurance that:
- The firm and its personnel fulfill their responsibilities in accordance with AUASB standards and applicable legal and regulatory requirements, and conduct engagements in accordance with such standards and requirements; and
- Engagement reports issued by the firm or engagement partners are appropriate in the circumstances.