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Definitions S

Sampling to System

Term

Definition

Sampling the application of assurance procedures to less than 100% of items within a population of relevance to the engagement such that all sampling units have a chance of selection in order to provide the assurance practitioner with a reasonable basis on which to draw conclusions about the entire population.
Sampling risk 

the risk that the auditor’s conclusion based on a sample may be different from the conclusion if the entire population were subjected to the same audit procedure. Sampling risk can lead to two types of erroneous conclusions: 

(i) In the case of a test of controls, that controls are more effective than they actually are, or in the case of a test of details, that a material misstatement does not exist when in fact it does. The auditor is primarily concerned with this type of erroneous conclusion because it affects audit effectiveness and is more likely to lead to an inappropriate audit opinion. 

(ii) In the case of a test of controls, that controls are less effective than they actually are, or in the case of a test of details, that a material misstatement exists when in fact it does not. This type of erroneous conclusion affects audit efficiency as it would usually lead to additional work to establish that initial conclusions were incorrect.

Sampling risk (in the context of ASAE 3150) 

the risk that the assurance practitioner’s conclusion based on a sample may be different from the conclusion if the entire population were subjected to the same assurance procedure. Sampling risk can lead to two types of erroneous conclusions: 

(i) That the controls are designed more suitably, the description is presented more fairly or the controls are operating more effectively than they actually are. The assurance practitioner is primarily concerned with this type of erroneous conclusion because it affects the engagement’s effectiveness and is more likely to lead to an inappropriate assurance conclusion. 

(ii) That controls are less effective than they actually are. This type of erroneous conclusion affects the engagement’s efficiency as it would usually lead to additional work to draw a conclusion. 

Sampling unit  the individual items constituting a population.
Scope of review  the review procedures deemed necessary in the circumstances to achieve the objective of the review.
Service auditor (in the context of ASA 402)  an auditor who, at the request of the service organisation, provides an assurance report on the controls of a service organisation.
Service auditor (in the context of ASAE 3402)  an assurance practitioner who, at the request of the service organisation, provides an assurance report on controls at a service organisation.
Service organisation  a third party organisation (or segment of a third party organisation) that provides services to user entities that are likely to be relevant to user entities’ internal control as it relates to relevant external reporting, whether financial, emissions and energy, carbon offsets, compliance or other reporting.
Service organisation (in the context of ASA 402)  a third-party organisation (or segment of a third-party organisation) that provides services to user entities that are part of those entities’ information systems relevant to financial reporting.
Service organisation (in the context of ASAE 3402)  a third-party organisation (or segment of a third-party organisation) that provides services to user entities that are likely to be relevant to user entities’ internal control as it relates to financial reporting.
Service organisation’s statement  the written statement about the matters referred to the suitable criteria in type 2 report (or type 1 report).
Service organisation’s system (in the context of ASA 402)  the policies and procedures designed, implemented and maintained by the service organisation to provide user entities with the services covered by the service auditor’s report.
Service organisation’s system (or the system) (in the context of ASAE 3402)  the policies and procedures designed and implemented by the service organisation to provide user entities with the services covered by the service auditor’s assurance report. The service organisation’s description of its system includes identification of: the services covered; the period, or in the case of a type 1 report, the date, to which the description relates; control objectives; and related controls.
Short form report (in the context of ASAE 3100)  an assurance report including only the matters required under paragraph 56 of this ASAE. 
Short form report (in the context of ASAE 3150)  assurance report including only the matters required under paragraph 89 of this ASAE. 
Significance  the relative importance of a matter, taken in context. The significance of a matter is judged by the practitioner in the context in which it is being considered. This might include, for example, the reasonable prospect of its changing or influencing the decisions of intended users of the practitioner’s report; or, as another example, where the context is a judgement about whether to report a matter to those charged with governance, whether the matter would be regarded as important by them in relation to their duties. Significance can be considered in the context of quantitative and qualitative factors, such as relative magnitude, the nature and effect on the subject matter and the expressed interests of intended users or recipients.
Significant component  a component identified by the group engagement team (i) that is of individual financial significance to the group, or (ii) that, due to its specific nature or circumstances, is likely to include significant risks of material misstatement of the group financial report.
Significant deficiency in internal control  a deficiency or combination of deficiencies in internal control that, in the auditor’s professional judgement, is of sufficient importance to merit the attention of those charged with governance.
Significant facility  a facility that is of individual significance due to the size of its emissions relative to the aggregate emissions included in the GHG statement or its specific nature or circumstances which give rise to particular risks of material misstatement.
Significant risk  an identified and assessed risk of material misstatement that, in the auditor’s judgement, requires special audit consideration.
Single financial statement or specific element of a financial statement (in the context of ASA 805) includes the related disclosure.
Sink  a physical unit or process that removes GHGs from the atmosphere.
Smaller entity 

an entity which typically possesses qualitative characteristics such as:

(a) Concentration of ownership and management in a small number of individuals (often a single individual – either a natural person or another enterprise that owns the entity provided the owner exhibits the relevant qualitative characteristics); and

(b) One or more of the following:

(i) Straightforward or uncomplicated transactions;

(ii) Simple record keeping; 

(iii) Few lines of business and few products within business lines;

(iv) Few internal controls;

(v) Few levels of management with responsibility for a broad range of controls; or

(vi) Few personnel, many having a wide range of duties.

These qualitative characteristics are not exhaustive, they are not exclusive to smaller entities, and smaller entities do not necessarily display all of these characteristics.
Source  a physical unit or process that releases GHGs into the atmosphere.
Special purpose financial report  a complete set of financial statements, including an assertion statement by those responsible for the financial report, prepared in accordance with a special purpose framework.
Special purpose financial statements  financial statements prepared in accordance with a special purpose framework. 
Special purpose framework  a financial reporting framework designed to meet the financial information needs of specific users. The financial reporting framework may be a fair presentation framework or a compliance framework. (see Applicable financial reporting framework)
Special purpose water accounting report  a water accounting report tailored to the information needs of a user able to command this information.
Specific control objective  control objective expressed in sufficient detail such that controls can be designed to achieve that objective directly without further breakdown.
Staff  professionals, other than partners, including any experts the firm employs.
Standards on assurance engagements  standards made by the AUASB which establish requirements and provide explanatory guidance for undertaking and reporting on assurance engagements other than audits or reviews of historical financial information covered by Australian Auditing Standards or Standards on Review Engagements.
Standards on review engagements  standards made by the AUASB which establish requirements and provide explanatory guidance on the responsibilities of an auditor, or assurance practitioner, when engaged to undertake a review engagement and on the form and content of the auditor’s, or assurance practitioner’s, review report.
Stated basis of preparation 

the basis on which the responsible party has chosen to prepare the financial information that is acceptable in view of the nature and objective of the document, or as required by applicable law or regulation. A stated basis of preparation may include: 

(i) the recognition and measurement principles contained in the Australian Accounting Standards (but not all the presentation and disclosure requirements), and the entity’s adopted accounting policies; 

(ii) recognition and measurement principles contained in the Australian Accounting Standards adjusted by pro forma adjustments, selected for the purpose for which the pro forma financial information (i.e. non IFRS financial information) is presented; 

(iii) recognition and measurement principles other than those contained in Australian Accounting Standards; or 

(iv) a basis selected by the responsible party, in order to present the financial information for its intended purpose. 

Statement (in the context of ASAE 3100)  the outcome in writing of the responsible party or evaluator’s evaluation of compliance with the compliance requirements, provided to the assurance practitioner in an attestation engagement. A Statement is the subject matter information in an attestation engagement on compliance.
Statement (in the context of ASAE 3150)  the outcome in writing of the responsible party or evaluator’s evaluation of the suitability of the design of controls to achieve the control objectives, and, if included in the scope of the engagement, the fair presentation of the description of the system, implementation of controls as designed or operating effectiveness of controls as designed, provided to the assurance practitioner in an attestation engagement. A Statement is the subject matter information in an attestation engagement on controls.
Statistical sampling 

an approach to sampling that has the following characteristics:

(i) Random selection of the sample items; and

(ii) The use of probability theory to evaluate sample results, including measurement of sampling risk.

A sampling approach that does not have characteristics (i) and (ii) is considered non statistical sampling.
Stratification  the process of dividing a population into sub populations, each of which is a group of sampling units which have similar characteristics (often monetary value).
Subject matter information  the outcome of measurement or evaluation of the underlying subject matter against the criteria, i.e., the information that results from applying the criteria to the underlying subject matter.
Subject matter information (in the context of ASAE 3150)  the outcome of the measurement or evaluation of the underlying subject matter against the criteria. In an assurance engagement on controls the subject matter information is the Statement of the responsible party or evaluator in an attestation engagement or the assurance practitioner’s conclusion in a direct engagement, providing the outcome of their evaluation.
Subject matter information ( in the context of ASAE 3610)  the information that results from applying the criteria to the underlying subject matter. The subject matter information in an engagement conducted under this Standard is the general purpose water accounting report.
Subject matter or underlying subject matter (in the context of ASAE 3150) the controls within the system designed to achieve the control objectives, and, if included in the scope of the engagement, the description of the system, the controls implemented or the controls in operation.
Subject matter or underlying subject matter (in the context of ASAE 3500)  the activity which is evaluated or measured against the identified criteria. 
Subsequent events  events occurring between the date of the financial report and the date of the auditor’s report, and facts that become known to the auditor after the date of the auditor’s report. 
Subsequent events (in the context of ASAE 3450)  events or facts that become known to the assurance practitioner after the date of the assurance report and prior to the relevant date.
Subservice organisation (in the context of ASA 402) a service organisation used by another service organisation to perform some of the services provided to user entities that are part of those user entities’ information systems relevant to financial reporting.
Subservice organisation (in the context of ASAE 3402)  a service organisation used by another service organisation to perform some of the services provided to user entities that are likely to be relevant to user entities’ internal control as it relates to financial reporting.
Substantive procedure 

an audit procedure designed to detect material misstatements at the assertion level. Substantive procedures comprise:

(i) Tests of details (of classes of transactions, account balances, and disclosures); and

(ii) Substantive analytical procedures.

Sufficiency (of audit evidence)  the measure of the quantity of audit evidence. The quantity of the audit evidence needed is affected by the auditor’s assessment of the risks of material misstatement and also by the quality of such audit evidence.
Suitable criteria (See Criteria)
Suitably qualified external person

an individual outside the firm with the competence and capabilities to act as an engagement partner. For example:

 

  • a partner of another firm, or
  • a member (with appropriate experience) of a professional accountancy body whose members may perform audits and reviews of financial reports and other financial information, other assurance engagements or related services engagements, or
  • a member (with appropriate experience) of an organisation that provides relevant quality control services
Suitably qualified external person (in the context of ASA 220)  an individual outside the firm with the competence and capabilities to act as an engagement partner, for example, a partner of another firm, or an employee (with appropriate experience) of a professional accountancy body whose members may perform audits of financial reports or audits of other historical financial information, or of an organisation that provides relevant quality control services. 
Summary financial statements  historical financial information that is derived from a financial report, or complete set of financial statements, but that contains less detail than the financial report, while still providing a structured representation consistent with that provided by the financial report, of the entity’s economic resources or obligations at a point in time or the changes therein for a period of time. Different jurisdictions may use different terminology to describe such historical financial information.
Supplementary information  information that is presented together with the financial report that is not required by the applicable financial reporting framework used to prepare the financial report, normally presented in either supplementary schedules or as additional notes.
System  the function or service at the entity, location or operational facility for which the controls are being reported upon by the assurance practitioner.