Introductory sections in PES 1

PES 1 is scoped to apply to “assurance practitioners”. The glossary to PES 1 describes an assurance practitioner as “a person or organisation … appointed or engaged to undertake assurance engagements or related services”.

As discussed in AG 3 below, an “assurance engagement” is scoped narrowly in PES 1. A significant proportion of the work carried out by the Auditor-General does not meet the definition of an assurance engagement under PES 1.

However, the Auditor-General considers that all of the work carried out on their behalf under sections 15 to 19 of the Public Audit Act 2001 should be considered an assurance engagement for the purposes of the Auditor-General’s Code. Sometimes the requirements of the Auditor-General’s Code and this Guide exceed the minimum requirements of PES 1.

Therefore, for the purpose of the Auditor-General’s Code and this Guide: any references to ”assurance engagement” are to be applied to any work carried out under sections 15 to 19 of the Public Audit Act 2001; and any references to “assurance practitioners” in PES 1 are 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.

In this document:

• the term “work carried out on behalf of the Auditor-General” means work carried out under sections 15 to 19 of the Public Audit Act 2001; and
• the term “individuals working for, or on behalf of, the Auditor-General” means individuals carrying out work for, or on behalf of, the Auditor-General under sections 15 to 19 of the Public Audit Act 2001. 

PES 1 is scoped to apply to “assurance engagements”. The glossary to PES 1 describes an assurance engagement as “An engagement in which an assurance practitioner aims to obtain sufficient appropriate evidence in order to express a conclusion designed to enhance the degree of confidence of the intended users … about the subject matter information (that is, the outcome of the measurement or evaluation of an underlying subject matter against criteria).”

In short, an assurance engagement is a process that involves the provision of a reasonable assurance conclusion (an audit) or a limited assurance conclusion (a review). However, a significant proportion on the work carried out on behalf of the Auditor-General is not designed to reach a conclusion that gives reasonable or limited assurance.

For the purposes of the Auditor-General’s Code and 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.

The third bullet point under paragraph 4 refers to “assurance services”. The glossary to PES 1 describes assurance services as comprising “any assurance engagements performed by an assurance practitioner”. Assurance services is the term used in PES 1 to describe one or more assurance engagements.

As explained in paragraph AG 3 above, 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 the Auditor-General’s Code and this Guide, any references to assurance services in PES 1 are to be applied to all work carried out 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.

The fourth bullet point under paragraph 4 above refers to Part 4B of PES 1. Part 4B does not apply to the Auditor-General.

The Public Audit Act 2001 places expectations on the Auditor-General that exceed the minimum requirements of PES 1, particularly in independence.

As a matter of principle, the Auditor-General’s independence requirements apply equally to all public entities and to all work carried out by, or on behalf of, the Auditor-General. In practice, this means that the requirements in PES 1 that apply to “public interest entities” shall be applied to all public entities, unless the Auditor-General requires a different standard to be applied. The two main exceptions to this principle are:

1. Under section 540 Long association of personnel (including partner rotation) with an audit client, the Auditor-General recognises the distinction between public entities that are “public interest entities” and other public entities. The Auditor-General’s rotation requirements are specified in section 540.
2. Under subsection 601 Accounting and bookkeeping services, the Auditor-General recognises that the provision of temporary accounting assistance or conducting compilation engagements is appropriate, in the interests of accountability, for small public entities within the parameters specified by the Auditor-General in subsection 601.

The Auditor-General’s expectations are further explained within the relevant parts of the Guide.