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Definitions E

Economy to External confirmation

Term

Definition

Economy the performance principle relating to the minimisation of the costs of resources, within the operational requirements of timeliness and availability of required quantity or quality.
Efficiency the performance principle relating to the extent to which the intended objectives at a program or entity level are achieved.
Effectiveness the performance principle relating to the minimisation of inputs employed to deliver the intended outputs in terms of quality, quantity and timing.
Element of a financial statement an element, account or item of a financial statement.
Emissions 

the GHGs that, during the relevant period, have been emitted into the atmosphere or would have been emitted into the atmosphere had they not been captured and channelled into a sink. Emissions can be categorised as:

  • Direct emissions (also known as Scope 1 emissions), which are emissions from sources that are owned or controlled by the entity
  • Indirect emissions, which are emissions that are a consequence of the activities of the entity, but which occur at sources that are owned or controlled by another entity. Indirect emissions can be further categorised as: 
  •   Scope 2 emissions, which are emissions associated with energy that is transferred to and consumed by the entity.
  •   Scope 3 emissions, which are all other indirect emissions.
Emissions deduction  any item included in the entity’s GHG statement that is deducted from the total reported emissions, but which is not a removal; it commonly includes purchased offsets, but can also include a variety of other instruments or mechanisms such as performance credits and allowances that are recognised by a regulatory or other scheme of which the entity is a part. 
Emissions factor  a mathematical factor or ratio for converting the measure of an activity (for example, litres of fuel consumed, kilometres travelled, the number of animals in husbandry, or tonnes of product produced) into an estimate of the quantity of GHGs associated with that activity. 
Emissions trading scheme  a market based approach used to control greenhouse gases by providing economic incentives for achieving reductions in the emissions of such gases. 
Emphasis of Matter paragraph a paragraph included in the auditor’s report that refers to a matter appropriately presented or disclosed in the financial report that, in the auditor’s judgement, is of such importance that it is fundamental to users’ understanding of the financial report.
Engagement circumstances  the broad context defining the particular engagement, which includes: the terms of the engagement; whether it is a reasonable assurance engagement or a limited assurance engagement, the characteristics of the underlying subject matter; the measurement or evaluation criteria; the information needs of the intended users; relevant characteristics of the responsible party, the measurer or evaluator, and the engaging party and their environment; and other matters, for example events, transactions, conditions and practices, that may have a significant effect on the engagement.
Engagement documentation the record of work performed, relevant evidence obtained, and conclusions the assurance practitioner reached (terms such as “working papers” or “work papers” are sometimes used).
Engagement letter the written terms of an engagement in the form of a letter.
Engagement partner  the partner or other person in 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 should be read as referring to a public sector equivalent where relevant.
Engagement partner (in the context of ASA 220)  means the partner or other person in the firm who is responsible for the audit engagement and its performance, and for the auditor’s 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 should be read as referring to a public sector equivalent where relevant.
Engagement quality control review  a process designed to provide an objective evaluation, on or before the date of the report, of the significant judgements the engagement team made and the conclusions it reached in formulating the report. The engagement quality control review process is for audits of financial reports of listed entities and those other engagements, if any, for which the firm has determined an engagement quality control review is required.
Engagement quality control review (in the context of ASA 220)  a process designed to provide an objective evaluation, on or before the date of the auditor’s report, of the significant judgements the engagement team made and the conclusions it reached in formulating the auditor’s report.  The engagement quality control review process is for audits of financial reports of listed entities and those other audit engagements, if any, for which the firm has determined an engagement quality control review is required.
Engagement quality control reviewer  a partner, other person in the firm, suitably qualified external person, or a team made up of such individuals, none of whom is part of the engagement team, with sufficient and appropriate experience and authority to objectively evaluate the significant judgements the engagement team made and the conclusions it reached in formulating the report.
Engagement quality control reviewer (in the context of ASA 220)  a partner, other person in the firm, suitably qualified external person, or a team made up of such individuals, none of whom is part of the engagement team, with sufficient and appropriate experience and authority to objectively evaluate the significant judgements the engagement team made and the conclusions it reached in formulating the auditor’s report. 
Engagement risk  the risk that the assurance practitioner expresses an inappropriate conclusion when the subject matter information is materially misstated.
Engagement risk (in the context if ASAE 3500)  the risk that the assurance practitioner expresses an inappropriate conclusion.
Engagement risk (in the context of ASAE 3610)  the risk that the assurance practitioner expresses an inappropriate conclusion when the general purpose water accounting report is materially misstated.
Engagement risk (in the context of ASRE 2400)  the risk that the assurance practitioner expresses an inappropriate conclusion when the financial statements are materially misstated. 
Engagement team  all partners and staff performing the engagement, and any individuals engaged by the firm or a network firm who perform procedures on the engagement. This excludes an auditor’s external expert engaged by the firm or by a network firm. 
Engagement team (in the context of ASA 220)  all partners and staff performing the engagement, and any individuals engaged by the firm or a network firm who perform audit procedures on the engagement. This excludes an auditor’s external expert engaged by the firm or a network firm. (also see Auditor’s expert)
Engagement team (in the context of ASAE 3000)  all assurance practitioners and staff performing the engagement, and any individuals engaged by the firm or a network firm who perform procedures on the engagement. This excludes an assurance practitioner’s external expert engaged by the firm or a network firm.
Engagement team (in the context of ASAE 3610)  all assurance practitioners and staff performing the assurance engagement, and any individuals engaged by the firm or a network firm who perform procedures on the engagement. This excludes an assurance practitioner’s external expert engaged by the firm or a network firm.
Engaging party  the party(ies) that engages the assurance practitioner to perform the assurance engagement.
Engaging party (in the context of ASAE 3450)  the body or person(s) that requested the services of the assurance practitioner for the assurance engagement. The engaging party is ordinarily the responsible party, as defined in ASAE 3450. References in this ASAE to “responsible party” are taken to include the engaging party unless otherwise stated.
Engaging party (in the context of ASAE 3500)  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.
Engaging party (in the context of ASAE 3610)  the party (or parties) engaging the assurance practitioner to perform the assurance engagement.
Engaging party (in the context of ASRS 4400)  the party(ies) that engages the assurance practitioner to perform the agreed upon procedures engagement.
Enquiry (in the context of ASRE 2400)  seeking information of knowledgeable persons from within or outside the entity.
Entity (in the context of ASAE 3100)  the legal entity, economic entity, or the identifiable portion of a legal or economic entity, or combination of legal or other entities or portions of those entities (for example, a joint venture) to which the compliance requirements relate.
Entity (in the context of ASAE 3410)  the legal entity, economic entity, or the identifiable portion of a legal or economic entity (for example, a single factory or other form of facility, such as a land fill site), or combination of legal or other entities or portions of those entities (for example, a joint venture) to which the emissions in the GHG statement relate.
Entity (in the context of ASAE 3450)  the entity responsible for the preparation and issuance of the public document or other document.
Entity (in the context of ASRS 4450)  the party whose financial statements or financial information is the subject of the comfort letter engagement. The entity may or may not be the Issuer.
Entity’s risk assessment process  a component of internal control that is the entity’s process for identifying business risks relevant to financial reporting objectives and deciding about actions to address those risks, and the results thereof. 
Entity’s system (or the system)  the policies and procedures designed and implemented by the entity to provide the functions or services covered by the assurance practitioner’s report, including the control objectives which address the overall objectives relevant to those functions or services and the controls designed to mitigate the risks that threaten achievement of those objectives.
Environmental risk  in certain circumstances, factors relevant to the assessment of inherent risk for the development of the overall audit plan may include the risk of material misstatement of the financial statements due to environmental matters.
Error  an unintentional misstatement in a financial report, including the omission of an amount or a disclosure. 
Estimation uncertainty  the susceptibility of an accounting estimate and related disclosures to an inherent lack of precision in its measurement. 
Evaluate  to identify and analyse the relevant issues, including performing further procedures as necessary, to come to a specific conclusion on a matter.  “Evaluation,” by convention, is used only in relation to a range of matters, including evidence, the results of procedures and the effectiveness of management’s response to a risk. (also see Assess
Evaluator (in the context of ASAE 3100)  the party(ies) who evaluates the underlying subject matter (compliance activities) against the criteria. The evaluator possesses expertise in the underlying subject matter.
Evaluator (in the context of ASAE 3150)  the party(ies) who evaluates the underlying subject matter against the criteria. The evaluator possesses expertise in the underlying subject matter.
Event(s) or transaction(s) 

underlying event(s) or transaction(s) that is (are):

(i) primarily the subject of the document; or

(ii) not the subject of the document but the effect(s) of which have been reflected in the financial information.

Evidence 

information used by the assurance practitioner in arriving at the assurance practitioner’s conclusion. Evidence includes both information contained in relevant information systems, if any, and other information. For purposes of the ASAEs: 

(i) Sufficiency of evidence is the measure of the quantity of evidence.

(ii) Appropriateness of evidence is the measure of the quality of evidence

Exception a response that indicates a difference between information requested to be confirmed, or contained in the entity’s records, and information provided by the confirming party.
Experienced auditor an individual (whether internal or external to the firm) who has practical audit experience, and a reasonable understanding of:

(i) Audit processes;

(ii) Australian Auditing Standards and applicable legal and regulatory requirements;

(iii) The business environment in which the entity operates; and

(vi) Auditing and financial reporting issues relevant to the entity’s industry.
Expert   (see Auditor’s expert and Management’s expert
Expertise skills, knowledge and experience in a particular field.
External confirmation audit evidence obtained as a direct written response to the auditor from a third party (the confirming party), in paper form, or by electronic or other medium.