Glossary and Effective date in PES 1

Glossary

Term	Auditor-General’s interpretation
Assurance client The responsible party and also, in an attestation engagement, the party taking responsibility for the subject matter information (who might be the same as the responsible party).	The term “client” is frequently used in standards regulating assurance engagements and refers to the entity or person subject to assurance procedures. However, it is recognised that the work carried out by assurance practitioners, and the resulting reports are intended for users who have no role in the management or governance of the entity. In the context of the Auditor-General, this is Parliament and the citizens of New Zealand.
Assurance engagement An engagement in which an assurance practitioner aims to obtain sufficient appropriate evidence in or to express a conclusion designed to enhance the degree of confidence of the intended users other than the responsible party about the subject matter information (that is, the outcome of the measurement or evaluation of an underlying subject matter against criteria).	For the purposes of this Guide, any references to an assurance engagement in PES 1 are to be applied to all work carried out on behalf of the Auditor-General under sections 15 to 19 of the Public Audit Act 2001. This is despite the fact that the work might not meet the definition of an assurance engagement in PES 1.
[NZ] Assurance practitioner A person or an organisation, whether in public practice, industry, commerce or the public sector, appointed or engaged to undertake assurance engagements or related services.	For the purpose of this Guide, any references to “assurance practitioner” in PES 1 is to be applied to any individuals carrying out work under sections 15 to 19 of the Public Audit Act 2001 for, or on behalf of, the Auditor-General despite the fact that they might not be carrying out work that meets the definition of an assurance engagement in PES 1.
[NZ] Assurance services Comprise of any assurance engagements performed by an assurance practitioner.	A significant proportion of the work carried out on behalf of the Auditor-General does not meet the PES 1 definition of an assurance engagement. However, for the purposes of this Guide, any references to assurance services in PES 1 are to be applied to all work carried out under sections 15 to 19 of the Public Audit Act 2001 on behalf of the Auditor-General. This is despite the fact that the work might not meet the definition of an assurance service in PES 1.
[NZ] Audit client An entity in respect of which a firm conducts an audit engagement. When the client is a FMC reporting entity considered to have a higher level of public accountability, audit client will always include its related entities. When the audit client is not a FMC reporting entity considered to have a higher level of public accountability, audit client includes those related entities over which the client has direct or indirect control. (See also paragraph R400.20.)	The term “client” is frequently used in standards regulating assurance engagements and refers to the entity or person subject to assurance procedures. However, it is recognised that the work carried out by assurance practitioners, and the resulting reports are intended for users who have no role in the management or governance of the entity. In the context of the Auditor-General, this is Parliament and the citizens of New Zealand.
Financial statements A structured representation of historical financial information, including related notes, intended to communicate an entity’s economic resources or obligations at a point in time or the changes therein for a period of time in accordance with a financial reporting framework. The related notes ordinarily comprise a summary of significant accounting policies and other explanatory information. The term can relate to a complete set of financial statements, but it can also refer to a single financial statement, for example, a balance sheet, or a statement of revenues and expenses, and related explanatory notes. The term does not refer to specific elements, accounts or items of a financial statement.	PES 1 refers to financial statements. The statements prepared by many New Zealand public entities include financial and non-financial information. For the purposes of this Guide, any references to financial statements include statements prepared by public entities that include both financial and non-financial information.
Key audit partner The engagement partner, the individual responsible for the engagement quality review, and other audit partners, if any, on the engagement team who make key decisions or judgements on significant matters with respect to the audit of the financial statements on which the firm will express an opinion. Depending upon the circumstances and the role of the individuals on the audit, “other audit partners” might include, for example, engagement partners for certain components in a group audit such as significant subsidiaries or divisions.	For the purposes of this Guide, a “key audit partner” will be the engagement partner or director (the Appointed Auditor), a second partner(s) or director(s), the engagement quality reviewer, and, possibly, other audit partners. Specialists such as tax or information systems specialists and other technical experts are generally not key audit partners.
Reasonable and informed third party test The reasonable and informed third party test is a consideration by the professional accountant about whether the same conclusions would likely be reached by another party. Such consideration is made from the perspective of a reasonable and informed third party, who weighs all the relevant facts and circumstances that the accountant knows, or could reasonably be expected to know, at the time that the conclusions are made. The reasonable and informed third party does not need to be an accountant, but would possess the relevant knowledge and experience to understand and evaluate the appropriateness of the accountant’s conclusions in an impartial manner. These terms are described in paragraph R120.5 A4	For the purposes of this Guide, the general application of the reasonable and informed third party test is discussed in paragraphs AG R120.5 A6.1 and AG R120.5 A6.2.
Review client An entity in respect of which a firm conducts a review engagement.	The term “client” is frequently used in standards regulating assurance engagements and refers to the entity or person subject to assurance procedures. However, it is recognised that the work carried out by assurance practitioners, and the resulting reports are intended for users who have no role in the management or governance of the entity. In the context of the Auditor-General, this is Parliament and the citizens of New Zealand.

Effective date

Auditor-General's requirement
Effective date The Auditor-General and those who carry out work on their behalf shall comply with the Auditor-General’s Code from 1 April 2023. Compliance with this Guide is required from 1 July 2024.