NZ SRE 1

0.1 This standard takes effect on the 28th day after the date of its publication under the Legislation Act 2019.¹

0.2 The accounting periods in relation to which this standard commences to apply are:

1. For an early adopter, those accounting periods following, and including, the early adoption accounting period:

2. For any other assurance practitioner, those accounting periods following, and including, the first accounting period that begins on or after the mandatory date.

0.3 In paragraph 0.2:

early adopter means an assurance practitioner that applies this standard for an early adoption accounting period.

early adoption accounting period means the accounting period:

1. that begins before the mandatory date but has not ended or does not end before this standard takes effect (and to avoid doubt, that period may have begun before this standard takes effect); and

2. for which the early adopter

   1. first applies this standard, and

   2. discloses in its assurance practitioner’s review report for that accounting period that this standard has been applied for that period.

0.4 mandatory date means 1 January 2026.

1. Service performance information is information about what the entity has done and achieved during the reporting period in working towards its broader aims and objectives, together with supporting contextual information, when applicable, about why an entity exists, what it intends to achieve and how it goes about this, prepared in accordance with the applicable financial reporting framework.

2. To obtain limited assurance over service performance information requires a different approach than may be used for the financial information. This NZ SRE emphasises the need to understand the entity and use that understanding to discuss with management whether the entity’s approach provides an appropriate basis for the service performance information and is expected to result in appropriate and meaningful reporting, prior to obtaining evidence whether anything has come to the assurance practitioner’s attention that the service performance information does not fairly reflect the actual service performance. (Ref: Para. A1-A2)

3. This New Zealand Standard on Review Engagements (NZ SRE) deals with the assurance practitioner’s responsibilities with respect to service performance information when an assurance practitioner is engaged to perform a review of service performance information concurrently with a review of the financial statements.

4. This NZ SRE establishes requirements and provides guidance not addressed by International Standard on Review Engagements (New Zealand) (ISRE (NZ)) 2400² with respect to service performance information.

5. This standard together with ISRE (NZ) 2400 sets out the requirements to obtain limited assurance over service performance information.

6. This NZ SRE applies when the assurance practitioner is required by law or regulation or is otherwise engaged to review both the financial statements and the service performance information prepared in accordance with the applicable financial reporting framework. (Ref: Para. A3)

7. The objectives of the assurance practitioner are to:

1. obtain limited assurance:

   1. about whether anything has come to their attention that causes the assurance practitioner to believe that the service performance information does not present fairly, in all material respects in that:

      1. the service performance information is appropriate and meaningful, and

      2. prepared in accordance with the entity’s measurement bases or evaluation methods in accordance with an applicable financial reporting framework.

   2. primarily by performing enquiry and analytical procedures, and, if judged by the assurance practitioner to be necessary in the circumstances, other procedures.

2. express a limited assurance conclusion in a written report.

8. For the purposes of this NZ SRE, the following terms have the meanings attributed below:

1. Misstatement – Misstatements can be intentional or unintentional, qualitative, or quantitative, and include omissions. Misstatements can arise from error or fraud and include:

   1. An element/aspect of service performance or performance measure and/or description, or a measurement basis or evaluation method that is not appropriate and meaningful; or

   2. An element/aspect of service performance or performance measure and/or description that would be appropriate and meaningful is omitted; or

   3. Incorrectly measuring or evaluating the entity’s service performance.

2. Management's expert – An individual or organisation possessing expertise in a field other than accounting or assurance, whose work in that field is used by the entity to assist the entity in preparing the service performance information.

3. Service organisation – 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 reporting service performance information.

9. The assurance practitioner shall apply ISRE (NZ) 2400 and this NZ SRE when reviewing service performance information. (Ref: Para. A4)

10. The practitioner shall have an understanding of the entire NZ SRE, including its application and other explanatory material, to understand its objectives and to apply its requirements properly.

11. The assurance practitioner shall not represent compliance with this NZ SRE unless the assurance practitioner has complied with the requirements of both this NZ SRE and ISRE (NZ) 2400 in relation to the review of service performance information.

12. The assurance practitioner shall plan and perform the review of service performance information by exercising professional judgement and with an attitude of professional scepticism. (Ref: Para. A5)

13. The assurance practitioner shall document the nature, timing and extent of the procedures performed to comply with this NZ SRE and ISRE (NZ) 2400.

14. The documentation shall include:

1. Significant professional judgements made in procedures performed, the evidence obtained, and conclusions reached. (Ref: Para. A6)

2. As far as possible, evidence of relevant relationships between the service performance information and the financial statements.

15. The terms of engagement shall include: (Ref: Para. A7-A10)

1. The responsibilities of the assurance practitioner with respect to the service performance information is to express a conclusion on the service performance information on whether anything has come to the assurance practitioner’s attention that causes them to believe that the service performance information does not present fairly, in all material respects:

   • in that the service performance information is appropriate and meaningful and prepared in accordance with the entity’s measurement bases or evaluation methods, in accordance with the applicable financial reporting framework.

2. The responsibilities of management or those charged with governance, as appropriate, including that they acknowledge and understand their responsibility on behalf of the entity for:

   1. The selection of elements/aspects of service performance, performance measures and/or descriptions, and measurement bases or evaluation methods that present service performance information that is appropriate and meaningful, in accordance with the applicable financial reporting framework;

   2. The preparation of service performance information in accordance with the entity’s measurement bases or evaluation methods, in accordance with the applicable financial reporting framework;

   3. The overall presentation, structure and content of the service performance information in accordance with the applicable financial reporting framework; and

   4. Such internal control as management or those charged with governance, as appropriate, determine is necessary to enable the preparation of the service performance information that is free from material misstatement, whether due to fraud or error.

16. The assurance practitioner shall obtain an understanding of: (Ref: Para. A11)

1. Why the entity exists and what it intends to achieve i.e., its purpose or objective.

2. What activities or services the entity performs.

3. Who the entity aims to serve i.e., the entity’s primary stakeholders and the primary users of the service performance report.

4. What is considered important to those stakeholders and users and what they may use the service performance information for.

17. The assurance practitioner shall obtain an understanding of: (Ref: Para. A12-A14)

1. The legal and regulatory framework applicable to the entity and the industry or sector in which the entity operates, and laws and regulations that specify the form, content, preparation, publication, and review of service performance information; and

2. How the entity is complying with that framework.

18. The assurance practitioner shall obtain an understanding of: (Ref: Para. A15-A18)

1. The applicable financial reporting framework relevant to the service performance information.

2. The process, including the rationale and logic the entity undertook to determine what elements/aspects of service performance, performance measures and/or descriptions, and measurement bases or evaluation methods and, if applicable, judgements to report.

3. The process the entity undertook to identify the intended users of the service performance information and the level of engagement with the intended users.

4. The measurement bases or evaluation methods used by the entity to assess the performance measures and/or descriptions and how these are made available to intended users.

5. Changes to the elements/aspects of service performance, performance measures and/or descriptions, and the measurement bases or evaluation methods used to report its service performance compared to prior year, planned, forecast or prospective information.

6. Where the entity intends to report its service performance information.

19. The practitioner shall obtain an understanding of internal control, over the preparation of the service performance information. (Ref: Para. A19-A20)

20. The assurance practitioner shall develop a review plan with a single review approach to concurrently cover the service performance information and the financial statements. (Ref: Para. A21-A23)

21. In establishing the review plan, the assurance practitioner shall:

1. Consider the factors that, in the assurance practitioner’s professional judgement, are significant in directing the engagement team’s efforts in respect of the review of service performance information.

2. Determine the timing of when to consider whether the entity’s service performance information is appropriate and meaningful.

3. Determine whether expertise in a field other than accounting or assurance may be necessary regarding the service performance information. (Ref: Para. A57)

22. The assurance practitioner shall discuss with management or those charged with governance, as appropriate:

1. What elements/aspects of service performance and performance measures and/or descriptions the entity intends to report as part of its service performance information.

2. What measurement bases or evaluation methods the entity intends to use to measure or evaluate its performance.

23. Any concerns identified shall then be communicated to management or as appropriate, those charged with governance as soon as practicable.

24. The assurance practitioner shall consider whether the service performance information: (Ref: Para. A6, A24-A27, A34)

1. Fairly reflects the assurance practitioner’s understanding of the entity’s performance from all other review work performed on the engagement. (Ref: Para. A28)

2. Is likely to meet the needs of the intended user to enable an informed assessment of the entity’s service performance. (Ref: Para. A29-A30)

3. Relates to an element/aspect of service performance that significantly contributes to the entity’s core purpose, functions or objectives. (Ref: Para. A31)

4. Is likely to have sufficient appropriate evidence to support the performance measure and/or description.

5. Is capable of measurement or evaluation in a consistent manner from period to period. (Ref: Para. A32-A33)

6. Is presented in a way that is easy to follow, concise, logical and aggregated where appropriate so that it will enable a user to identify the main points of the entity’s service performance in that year.

25. The assurance practitioner shall use the understanding gained in paragraphs 16-19 to determine the significant elements/aspects of service performance. (Ref: Para. A35- A36)

26. The assurance practitioner shall determine and document materiality considerations and/or materiality for service performance information to determine the: (Ref: Para. A6, A37-A40, A59)

1. Nature, timing and extent of review procedures; and

2. Assurance practitioner’s tolerance for misstatement in relation to material service performance measures and/or descriptions.

27. The assurance practitioner shall apply materiality when assessing: (Ref: Para. A41- A49)

1. The appropriateness and meaningfulness of the significant elements/aspects of service performance and related material performance measures and/or descriptions; and (Ref: Para. A41-A42)

2. Individual or collective misstatements within performance measures and/or descriptions, measurement bases or evaluation methods, that based on the assurance practitioner’s judgement, are likely to influence the decisions of the intended users based on the information.

28. The assurance practitioner shall revise the judgements made in determining materiality for the service performance information if matters come to the assurance practitioner’s attention during the review that would have caused the assurance practitioner to make a different materiality judgement.

29. The assurance practitioner shall consider individually or collectively, the impact on the service performance information, of all misstatements identified during the review, other than those that are clearly trivial, that are uncorrected by the entity. (Ref: Para. A44-A49)

30. The assurance practitioner shall use the understanding obtained in paragraphs 16-19, to identify areas in the service performance information where material misstatements are likely to arise and thereby provide a basis for designing procedures to address those areas.

31. In obtaining sufficient appropriate evidence as the basis for a limited assurance conclusion on the service performance information, the assurance practitioner shall design and perform enquiry and analytical procedures and, if judged by the assurance practitioner to be necessary in the circumstances, other procedures: (Ref: Para. A50- A53)

1. To address all material service performance information; and

2. To address areas where material misstatements are likely to arise.

32. In designing analytical procedures, the assurance practitioner shall consider whether the data relevant to service performance information from the entity’s information system and records are adequate for the purpose of performing the analytical procedures. (Ref: Para. A54)

33. Where possible the assurance practitioner shall draw on relationships that exist between the service performance information and the financial statements. (Ref: Para. A55)

34. If the assurance practitioner becomes aware of a matter that causes the assurance practitioner to believe that the service performance information may be materially misstated, the assurance practitioner shall design and perform additional procedures to obtain further evidence until the assurance practitioner is able to:

1. Conclude that the matter is not likely to cause the service performance information to be materially misstated; or

2. Determine that the matter causes the service performance information to be materially misstated.

35. Where the service performance information relates to a group, obtain sufficient appropriate evidence regarding the service performance information of the components and the aggregation or consolidation process in order to express a conclusion on the group service performance information. (Ref: Para. A56)

36. The assurance practitioner shall comply with ISRE (NZ) 2400³ for actual, suspected or alleged non-compliance with provisions of those laws and regulations that are generally recognised to have a direct effect on the reporting of material service performance information.

37. The assurance practitioner shall determine whether information to be used as evidence has been prepared using the work of a management’s expert. If the assurance practitioner uses work performed by a management’s expert in the course of performing the review, the assurance practitioner shall take appropriate steps to be satisfied that the work performed is adequate for the assurance practitioner’s purpose. (Ref: Para. A57)

38. Where service performance information is derived from a service organisation, the assurance practitioner shall obtain an understanding of the nature and significance of the services provided by the service organisation to identify areas where material misstatements are likely to arise in the service performance information and thereby provide a basis for designing procedures to address those areas.

39. In addition to the representations required by ISRE (NZ) 2400 ⁴, the assurance practitioner shall request written representations from management or those charged with governance, as appropriate, that they have fulfilled their responsibility for: (Ref: Para. A58)

1. The selection of elements/aspects of service performance, performance measures and/or descriptions, and measurement bases or evaluation methods that present service performance information that is appropriate and meaningful, in accordance with the applicable financial reporting framework.

2. The preparation of service performance information in accordance with the entity’s measurement bases or evaluation methods, in accordance with the applicable financial reporting framework.

3. The overall presentation, structure and content of the service performance information in accordance with the applicable financial reporting framework.

4. Such internal control as management or those charged with governance, as appropriate, determine is necessary to enable the preparation of the service performance information that is free from material misstatement, whether due to fraud or error.

40. The assurance practitioner shall evaluate whether sufficient appropriate evidence has been obtained regarding service performance information, in accordance with ISRE (NZ) 2400⁵. (Ref: Para. A59)

41. The assurance practitioner shall form a conclusion on whether anything has come to their attention that causes the assurance practitioner to believe that the service performance information does not present fairly⁶ , in all material respects:

42. In forming a conclusion on the service performance information, the assurance practitioner shall consider:

1. Whether uncorrected misstatements are material, individually or collectively, as required by paragraph 29.

2. The sufficiency and appropriateness of evidence obtained, as required by paragraph 40.

43. When the information is prepared in accordance with a fair presentation framework, in addition to the requirements of paragraph 42, the assurance practitioner shall also consider whether anything has come to the assurance practitioner’s attention regarding:

1. The appropriateness and meaningfulness of the service performance information presented by the entity.

2. Whether the service performance information is not prepared in accordance with the entity’s measurement bases or evaluation methods, in accordance with the applicable financial reporting framework.

3. The availability of the measurement bases or evaluation methods to intended users. (Ref: Para. A60-A61)

4. Whether the overall presentation of the service performance information has been undermined by the inclusion of irrelevant information or information that obscures a proper understanding of the matters disclosed.

5. Whether the overall presentation, structure and content of the service performance information represents the service performance of the entity in a manner that does not achieve fair presentation.

44. The assurance practitioner’s conclusion on the service performance information, whether unmodified or modified, shall be expressed in the appropriate form in the context of the financial reporting framework applied to the service performance information.

45. The assurance practitioner shall express an unmodified conclusion in the assurance practitioner’s report on the service performance information when the assurance practitioner has obtained limited assurance to be able to conclude that nothing has come to their attention that causes the assurance practitioner to believe that the service performance information, does not present fairly, in all material respects, in that the service performance information is appropriate and meaningful and prepared in accordance with the entity’s measurement bases or evaluation methods, in accordance with the applicable financial reporting framework.

46. The assurance practitioner shall modify the conclusion, with respect to the service performance information when:

1. The assurance practitioner concludes that either individually or collectively the elements/aspects of service performance, performance measure and/or descriptions, or measurement bases or evaluation methods are materially misstated in that it is not appropriate and meaningful and as such is not in accordance with the applicable financial reporting framework, or

2. The assurance practitioner concludes, based on the evidence obtained, that the service performance information is not individually or collectively free from material misstatement, or

3. The assurance practitioner is unable to obtain sufficient appropriate evidence to conclude that the service performance information, as a whole, is free from material misstatement.

47. When the assurance practitioner modifies the conclusion with respect to the service performance information, the assurance practitioner shall consider the effect of the modification on the conclusion on the financial statements. (Ref: Para. A62)

48. If the assurance practitioner modifies the conclusion on the financial statements, the assurance practitioner shall consider the effect of the modification on the conclusion of the service performance information.

49. The assurance practitioner’s report on the financial statements and the service performance information shall be included in a single report and shall include the elements required by ISRE (NZ) 2400 ⁷ as applicable to the service performance information. (Ref: Para. A63-A64)

50. In addition to the requirements addressing financial statements in ISRE (NZ) 2400, the assurance practitioner’s report shall:

1. Describe the responsibilities of management or those charged with governance, as appropriate, including for:

   1. The selection of elements/aspects of service performance, performance measures and/or descriptions, and measurement bases or evaluation methods that present service performance information that is appropriate and meaningful, in accordance with the applicable financial reporting framework;

   2. The preparation of service performance information in accordance with the entity’s measurement bases or evaluation methods, in accordance with the applicable financial reporting framework;

   3. The overall presentation, structure and content of the service performance information in accordance with the applicable financial reporting framework; and

   4. Such internal control as management or those charged with governance, as appropriate, determine is necessary to enable the preparation of service performance information that is free from material misstatement, whether due to fraud or error;

2. Describe the assurance practitioner’s responsibility to express a conclusion on the service performance information including reference to this NZ SRE and ISRE (NZ) 2400. This description should include the responsibility of the assurance practitioner to conclude whether anything has come to the assurance practitioner’s attention that causes them to believe that the service performance information does not present fairly, in all material respects:

   1. in that the service performance information is appropriate and meaningful, and prepared in accordance with the entity’s measurement bases or evaluation methods, in accordance with the applicable financial reporting framework;

3. Describe a review of service performance information and its limitations, including the following statements:

   1. A review engagement under this NZ SRE and ISRE (NZ) 2400 is a limited assurance engagement;

   2. The assurance practitioner performs procedures, primarily consisting of making enquiries of management and others within the entity, as appropriate, applying analytical procedures, and any other procedures necessary in the circumstances, and evaluates the evidence obtained; and

   3. The procedures performed in a review are substantially less than those performed in an audit conducted in accordance with auditing standards issued by the External Reporting Board, and, accordingly, the assurance practitioner does not express an audit opinion on the service performance information; and

4. Include a conclusion paragraph that:

   1. Contains the assurance practitioner’s conclusion on the service performance information;

   2. Identifies the service performance information; and

   3. Refers to the measurement bases or evaluation methods.

51. When the assurance practitioner modifies the conclusion with respect to the service performance information only, the conclusion shall clearly indicate that the conclusion on the financial statements is not modified. The assurance practitioner shall:

1. Use the heading “Qualified Conclusion on the Statement of Service Performance”, “Adverse Conclusion on the Statement of Service Performance” or “Disclaimer of Conclusion on the Statement of Service Performance” as appropriate, for the conclusion paragraph in the assurance practitioner’s report. The conclusion with respect to the financial statements shall use the heading “Conclusion on the Financial Statements”; and

2. Provide a description of the matter giving rise to the modification, under an appropriate heading (for example, “Basis for Qualified Conclusion on the Statement of Service Performance”, “Basis for Adverse Conclusion on the Statement of Service Performance” or “Basis for Disclaimer of Conclusion on the Statement of Service Performance”, as appropriate), in a separate section in the assurance practitioner’s report immediately before the conclusion paragraph (referred to as the basis for conclusion paragraph in ISRE (NZ) 2400⁸ ).

52. If the assurance practitioner is unable to obtain sufficient appropriate evidence to form a conclusion, the assurance practitioner shall discuss with management or those charged with governance, as appropriate, the effects such limitations have on the scope of the review. (Ref: Para. A65-A66)

53. If the assurance practitioner considers it necessary to draw users’ attention to a matter presented or disclosed in the service performance information, that in the assurance practitioner’s judgement, is of such importance that it is fundamental to users’ understanding of the service performance information, the assurance practitioner shall include an Emphasis of Matter paragraph in the assurance practitioner’s report.

54. If the assurance practitioner considers it necessary to communicate a matter other than those that are presented or disclosed in the service performance information, that in the assurance practitioner’s judgement, is relevant to users’ understanding of the review of service performance information, the assurance practitioner shall include an Other Matter paragraph in the assurance practitioner’s report.

55. In applying ISRE (NZ) 2400⁹ , the assurance practitioner shall communicate with management and those charged with governance, as appropriate, on a timely basis during the course of the review engagement, all matters concerning the review of service performance information that, in the assurance practitioner’s professional judgement, are of sufficient importance to merit the attention of management or those charged with governance, as appropriate. (Ref: Para. A67-A69)

(Ref: Para. 2)

A1. The assurance practitioner may benefit from early engagement with the entity to understand the entity’s service performance reporting process, and address any challenges that may arise having considered the factors required by paragraph 24.

A2. Service performance reporting requirements are generally less prescribed than financial information. This may result in varied service performance reporting between similar entities and industries. Therefore, when providing limited assurance over service performance information, prior to obtaining evidence that the service performance information fairly reflects actual performance, it is fundamental that the assurance practitioner uses their understanding of the entity, to firstly consider what service performance information the entity has selected to report, and how that information will be measured or evaluated.

A3. An entity may be required to identify the service performance information that is prepared in accordance with the applicable financial reporting framework. This standard only applies to service performance information prepared in accordance with the applicable financial reporting framework.

A4. This NZ SRE supplements ISRE (NZ) 2400. It expands on how ISRE (NZ) 2400 is to be applied to the service performance information. This NZ SRE includes specific requirements for the service performance information that are not explicitly dealt with by ISRE (NZ) 2400 or where the application of ISRE (NZ) 2400 differs as a result of the nature of the service performance information.

A5. The applicable financial reporting framework enables an entity to determine how it selects, aggregates, measures and presents its service performance information. As such, this elevates the need for early engagement and planning of sufficient time to obtain an understanding of the entity and to exercise professional judgement, particularly to assess whether the service performance information is appropriate and meaningful and to determine materiality. The assurance practitioner may find it helpful to seek out examples of service performance reporting of similar entities.

A6. Examples of the use of professional judgement to include in documentation include significant matters and judgements relating to:

A7. The terms of the review engagement include references to the service performance information.

A8. A review is conducted in accordance with this NZ SRE on the basis that management, and where appropriate, those charged with governance, have acknowledged and understand that they have a responsibility for the preparation of service performance information that is appropriate and meaningful and for designing, implementing and maintaining a system of internal control that management and, where appropriate, those charged with governance, determine is necessary to enable the preparation of service performance information that is appropriate and meaningful. The entity’s process to identify service performance information to report should appropriately support the preparation of service performance information that is appropriate and meaningful. In the absence of such a process, it may be difficult to establish whether management or those charged with governance, as appropriate, have a reasonable basis for the service performance information.

A9. Some entities are required by the applicable financial reporting framework to prepare entity information. ¹⁰ For Tier 3 registered charities that have a statutory review requirement ¹¹, all information required to be prepared by the applicable reporting standard is required to be reviewed, including the entity information.

A10. An illustrative engagement letter that covers the agreed terms of the engagement of the performance report is set out in Appendix 1.

A11. The assurance practitioner may obtain an understanding through:

1. Enquiries with management or those charged with governance, as appropriate.

2. Reading, when relevant:

• • Founding documents such as rules, constitution or trust deed.

  • Statement of intent.

  • Past statements of service performance.

  • Funding documents or agreements.

  • Minutes from governance meetings.

  • Entity’s newsletters.

  • Entity’s public website.

  • Charities register.

  • Media reports.

A12. Laws and regulations may differ among entities depending on their governing legislation.

A13. The nature of the performance report may be specified in applicable legislation, which may indirectly determine the nature of the performance information to be reported.

A14. The provisions of those laws and regulations may require the entity to present particular service performance information which may be over and above any requirements to comply with the applicable financial reporting framework. As the reporting is required by law and regulation the assurance practitioner is not required to assess whether the service performance information is appropriate and meaningful.

A15. The entity will need to interpret the applicable financial reporting framework and either select pre-existing external service performance information, including pre-established performance measures and/or descriptions, or measurement bases or evaluation methods from guidance, standards, laws or regulation, or it may need to apply judgement to develop internally its own performance measures and/or descriptions, or measurement bases or evaluation methods for its service performance information. The need for such judgement makes the preparation of service performance information inherently more susceptible to the risk of management bias.

A16. The process applied by the entity to determine what service performance information to report on and how to measure or evaluate its service performance information may affect the work that the assurance practitioner carries out. The level of potential management bias in selecting the elements/aspects of service performance, performance measures and/or descriptions, and measurement bases or evaluation methods directly correlates with the amount of work that the assurance practitioner may need to perform when considering the service performance information reported or intended to report. For example, use of performance measures and/or descriptions, or measurement bases or evaluation methods specified by external benchmarks or industry guidance may require less work than internally generated performance measures and/or descriptions, or measurement bases or evaluation methods, as external guidance reduces the risk of management bias. The entity may have documentation that reflects the process it went through in selecting its service performance information. Transparency about the entity’s process to select its service performance information and the entity’s consideration of materiality may also affect the work that the assurance practitioner carries out.

A17. In the early stages of reporting service performance information, the entity may not have developed an appropriate process, supported by internal controls, to identify its service performance information, or service performance information may be less accurate or complete. The entity may therefore be unable to include certain aspects of its service performance in its service performance information. The assurance practitioner exercises professional judgement to conclude on the impact of such omissions (including those for which the entity has provided reasons or explanations). This is particularly relevant since entities will be at varying stages of maturity in respect of preparing service performance information.

A18. Unforeseen events impacting the entity may require the entity to focus on different elements/aspects of service performance, performance measures and/or descriptions, or measurement bases or evaluation methods than intended when the service performance information was determined for the period. The assurance practitioner should gain an understanding of such events and the impact it has on service performance reporting and whether any alternative elements/aspects of service performance, performance measures and/or descriptions, or measurement bases or evaluation methods used are more appropriate and meaningful to fairly reflect the revised activities or services performance of the entity over the period.

A19. Internal control systems related to the preparation of service performance may be less developed or less well embedded into the operations than those related to the preparation of financial information. They may be less traditional to those used for financial information.

A20. An entity’s internal control systems related to the preparation of service performance information may vary by size or complexity of the entity, and the nature and complexity of the service performance information. There is a difference between simple controls and inadequate controls. Simple controls may be adequate when the entity and the

performance measure and/or description and its measurement basis or evaluation method are not complex.

A21. Although it is likely that the service performance information and financial information will come from different systems, a single approach to the review recognises the inextricable link between the service performance information and the financial statements of an entity.

A22. It is important to engage with the entity as early as possible to understand the elements/aspects of service performance, performance measures and/or descriptions, and measurement bases or evaluation methods the entity intends to report.

A23. Expertise in a field other than accounting or assurance may be necessary as a result of information included in the service performance information, for example, expertise in relation to the measurement of complex performance measures.

A24. The assurance practitioner may consider how well the entity has balanced the qualitative characteristics and pervasive constraints¹² when selecting its elements/aspects of service performance, performance measures and/or descriptions, and measurement bases and evaluation methods. The assurance practitioner’s documentation may include the factors they considered in reaching their conclusion rather than a systematic evaluation of the service performance information against each qualitative factor and pervasive constraint.

A25. Consideration of whether the service performance information will result in appropriate and meaningful reporting may include the following aspects of service performance information:

A26. It is the entity’s responsibility to determine what information to report, and for the assurance practitioner to consider the process and rationale the entity applied in arriving at the selection of information to report, and to use professional judgement to assess whether the reported information does not present fairly, in all material respects, the service performance information.

A27. The entity’s selection of appropriate and meaningful service performance information to report involves a considerable amount of judgement. Although enquiry may be the principal source of evidence, there may be documentation that provides evidence to support the judgements made by the entity in selecting the service performance information to report, for example, those referred to in paragraph A11.

A28. The assurance practitioner may consider whether the service performance information inappropriately attributes service performance to the entity. (Ref: Para. 24(a))

A29. The assurance practitioner may consider: (Ref: Para. 24(b))

• Whether the service performance information presents a neutral view including all significant aspects, both positive and negative.

• Whether any service performance information is omitted, where this is an appropriate link to the service performance of the entity.

• Whether there is potential for management bias in the selection of the performance measure and/or descriptions.

• If the entity reports targets, how those targets may obscure a proper understanding of the entity’s service performance.

• The results of surveys. For example, satisfaction surveys, or other evidence of stakeholder consultation, e.g., feedback, complaints which may indicate the appropriateness of the service performance information.

• Whether the process to determine what service performance information to report involved the intended users and what information they may find helpful to assess the service performance of the entity - lowering the risk of management bias.

• External requirements or agreements with external parties that influence the entity’s service performance accountability.

• Whether the service performance information was pre-agreed with key stakeholders.

• Guidelines developed and issued collectively by a group or published in journals or results of benchmarking studies, for example, in the central government sector, central agencies may provide guidance or establish requirements for the preparation of service performance information. The assurance practitioner may need to evaluate the suitability of these guidelines to the entity’s circumstances and how these align to intended users’ needs. More detailed service performance reporting may be more appropriate.

• Whether an overly voluminous service performance report is detracting from the usefulness and relevance of the overall report.

• Whether the service performance report is complete.

A30. An entity may select service performance information to report on the basis that the selected performance is readily obtainable or measurable however it may not be the most relevant information to enable the user to understand or assess the service performance of the entity. (Ref: Para. 24(b))

A31. The assurance practitioner may consider whether: (Ref: Para. 24(c))

• The service performance information shows clear and logical links between the element/aspect of service performance to be measured or evaluated and the entity’s overall purpose and strategies.

• There is other potentially more relevant service performance information that could have been used and reasons why those were not included.

• The entity has a clear understanding of its contribution toward longer term elements/aspects of service performance.

• The entity uses a well-established performance framework, theory of change or intervention logic model to explain how its service performance during the reporting period relates to its broader aims and objectives or may have described predetermined objectives or specific performance goals or targets in agreements with key stakeholders; for example, a local authority’s Long-Term Plan, statement of intent, charter, recent plans and strategies or agreements with key funders. The selection of service performance information pre-agreed with key stakeholders may have a lower risk of management bias.

• The service performance information reflects how the entity assesses its service performance for the purpose of internal decision making.

A32. The potential for management bias directly correlates with the amount of consideration that the assurance practitioner may need to give to the appropriateness and meaningfulness of the service performance information. For example, the assurance practitioner may need to consider management bias when there are multiple measurement bases or evaluation methods possible to assess a performance measure. Also, there may be greater management bias when the measurement basis or evaluation method is internally generated rather than an external industry standard. (Ref: Para. 24(e))

A33. Some service performance information that is more relevant for users, may be measured less precisely. The assurance practitioner may perform different review procedures than for those where the service performance can be more precisely measured. (Ref: Para. 24(e))

A34. The assurance practitioner’s consideration of the appropriateness and meaningfulness of service performance information may be an iterative process.

A35. There can be significant variation in the service performance information selected and presented by entities. The assurance practitioner’s understanding of the entity is important in determining what are the significant elements/aspects of the entity’s service performance which are important to intended users of the service performance information.

A36. Understanding what elements/aspects of service performance are significant to users may assist the assurance practitioner in focusing their review efforts and applying professional judgement when considering any misstatements identified.

A37. The assurance practitioner’s materiality considerations and determination of materiality is a matter of professional judgement. The requirements in paragraph 24, particularly the factors regarding relevance considered by the assurance practitioner in paragraphs A24 to A34, may assist the assurance practitioner to determine materiality considerations and/or materiality.

A38. The applicable financial reporting framework may discuss the concept of materiality in the context of preparation and presentation of service performance information. Such a discussion may provide a frame of reference to the assurance practitioner in determining what is material. The assurance practitioner’s consideration of the entity’s process to select the elements/aspects of service performance, the performance measures and/or descriptions, and measurement bases or evaluation methods to use also provides context in determining materiality considerations and/or materiality.

A39. The basis for materiality will likely differ from the financial statements. Materiality may be expressed in terms of the appropriate unit of account for each element/aspect of service performance or performance measure and/or description reported. The assurance practitioner is unlikely to be able to set an overall materiality because there is unlikely to be a common unit of account. It may be possible to group similar service performance measures and/or descriptions together and make materiality decisions on the same basis if they have the same unit of account.

A40. The materiality considerations determine the assurance practitioner's tolerance for misstatement in relation to material service performance measures and/or descriptions. Material misstatements may occur in both qualitative and quantitative service performance information. The assurance practitioner may need to exercise professional judgement beyond the traditional approach of applying a percentage to a chosen benchmark. In some instances, there may be no tolerance for error in some performance measures and/or descriptions.

A41. It is a matter of professional judgement whether the assurance practitioner’s assessment of the significant elements/aspects of service performance and related material performance measures and/or descriptions required by paragraph 27(a) gives rise to a material misstatement.

A42. The assurance practitioner may firstly consider which elements/aspects of service performance are important to intended users. Having identified those, the assurance practitioner may then consider what are the material performance measures and/or descriptions that measure performance in those elements/aspects of service performance. A tolerance for misstatement is then applied by the assurance practitioner to material service performance measures and/or descriptions.

A43. The following qualitative factors may assist the assurance practitioner in applying materiality:

A44. A misstatement may arise when:

• An element/aspect of service performance or performance measure or description, or a measurement basis or evaluation method selected is assessed by the assurance practitioner as not being appropriate and meaningful.

• An element/aspect of service performance or performance measure and/or description is omitted that is assessed by the assurance practitioner as being appropriate and meaningful.

• The information is not prepared in accordance with the entity’s measurement basis or evaluation method.

• The entity’s service performance information is not in accordance with the applicable financial reporting framework.

A45. An individual misstatement, impacting a single element/aspect of service performance, performance measure and/or description, may be material.

A46. A number of misstatements, when observed collectively across the service performance information, may also be material if they amount to a misleading portrayal of the entity’s service performance information. Even though taken individually, each service performance measure and/or description may not be materially misstated, the assurance practitioner needs to consider whether the service performance information as a whole is materially misstated.

A47. It is unlikely that the assurance practitioner will be able to aggregate misstatements numerically. However, this does not remove the need for the assurance practitioner to form a conclusion as to whether uncorrected misstatements are material individually or collectively, as required by paragraph 29.

A48. The assurance practitioner exercises professional judgement to conclude on the impact of any material misstatement on the conclusion. The assurance practitioner may consider factors such as whether the misstatement impacts a significant element/aspect of service performance and whether it is likely to influence the decisions of the intended users.

A49. Examples of factors that may lead to a material misstatement, include:

A50. Service performance information may not come directly from traditional financial reporting information systems and source records. Nevertheless, the entity will need an accurate record keeping system that provides relevant and reliable evidence. The assurance practitioner may find it more challenging and need to think differently than for traditional financial reporting to obtain relevant and reliable evidence.

A51. The mix of procedures to be performed may vary compared with the mix used in regard to the financial statements, but the mix of procedures used does not alter the level of evidence required.

A52. In a review, the assurance practitioner performs primarily enquiry and analytical procedures. However, the nature of service performance information reported may have an effect on the mix of procedures used. For example, due to the nature of some of the service performance information analytical procedures may not be relevant and so another substantive procedure may be more appropriate.

A53. The fact that the assurance practitioner may deem it necessary to perform other procedures does not alter the assurance practitioner’s objective of obtaining limited assurance in relation to the service performance information.

A54. The assurance practitioner’s consideration of whether data to be used for analytical procedures are satisfactory for the intended purpose(s) of those procedures is based on the assurance practitioner’s understanding of the entity and its environment and is influenced by the nature and source of data, and by the circumstances in which the data are obtained. The following considerations may be relevant:

A55. In designing analytical procedures, the assurance practitioner may be able to identify relationships between the service performance information and the financial information as a sense check that the financial and service performance information are reflecting a consistent report of the performance of the entity. For example, does the movement in fuel expense in the financial statements reflect the number of home visits reported.

A56. When the assurance practitioner is engaged to review the service performance information of a group of entities, the planned nature, timing and extent of the procedures for the review are directed at achieving the assurance practitioner’s objectives for the review engagement stated in this NZ SRE, but in the context of the group service performance information.

A57. The assurance practitioner may use the work of an individual or organisation possessing expertise in a field other than accounting or assurance, whose work in that field is used by the entity to assist the entity in preparing the service performance information (a management’s expert). Examples may include a professional survey firm conducting a perception questionnaire or satisfaction survey, or preparing a water quality report.

A58. An illustrative written representation letter is set out in in Appendix 2.

A59. What constitutes sufficient appropriate evidence is a matter of professional judgement. In exercising professional judgement, the assurance practitioner may consider materiality and areas identified in the service performance information where material misstatements are likely to arise. The assurance practitioner may need to identify alternative sources of evidence not normally considered for reviews of financial information.

A60. The measurement bases or evaluation methods used to assess a performance measure and/or description need to be made available to intended users to allow them to understand how the underlying service performance information has been measured or evaluated.

A61. The measurement bases or evaluation methods may be made available to the intended users in one or more ways, for example:

1. Publicly, for example, readily available documents such as a published external assessment framework on a website.

2. Through inclusion in a clear manner in the presentation of the service performance information, in particular for entity-developed measurement bases or evaluation methods.

3. Through inclusion in a clear manner in the description of the performance measure and/or description itself, for example, number of meals delivered.

4. By general understanding, for example, the method of measuring time in hours and minutes. The assurance practitioner may consider whether it is clear what the time is measuring. For example, an entity may measure its response time to an outage but will need to be clear as to whether the response time is measured from when a call is lodged, or measures the time taken to address a fault from when someone arrives to address the fault.

A62. In those circumstances where the assurance practitioner concludes that the service performance information is not presented fairly and that the assurance conclusion should be modified, the assurance practitioner will need to exercise professional judgement to determine whether to issue a modified conclusion on just the service performance information or whether to modify the conclusion on both the service performance information and the financial statements. In many instances, a modified conclusion in respect of the service performance information will not impact upon the conclusion on the financial statements.

A63. The assurance practitioner’s report includes references to the service performance information. An illustrative Assurance Practitioner’s Report that includes references to the service performance information is set out in Appendix 3.

A64. Illustrations of Assurance Practitioner’s Reports with Modified Conclusions with respect to Service Performance Information are set out in Appendix 4.

A65. Inability to perform a specific procedure does not constitute a limitation on the scope of the review if the assurance practitioner is able to obtain sufficient appropriate evidence by performing other procedures.

A66. Limitations on the scope of the review imposed by management may have other implications for the review, such as for the assurance practitioner’s consideration of areas where the service performance information is likely to be materially misstated, and engagement continuance.

A67. The assurance practitioner is encouraged to communicate with management or as appropriate, with those charged with governance early or as soon as practicable.

A68. The assurance practitioner may communicate the following matters in relation to the review of service performance information:

1. Any uncorrected misstatements identified during the review of the service performance information;

2. The assurance practitioner’s views about significant judgements made in reporting the entity’s service performance information, if applicable, including any areas for improvement;

3. Significant difficulties, if any, encountered during the review, for example, extensive unexpected effort required to obtain sufficient appropriate evidence or the unavailability of expected information.

4. Unless all of those charged with governance are involved in managing the entity, significant matters arising during the review that were discussed, or subject to correspondence with management, such as, matters that were pervasive to the service performance information, biases in the performance measures and/or descriptions, for example, questions in a survey articulated to drive a particular result; and

5. Any other matters in respect of the service performance information that, in the assurance practitioner’s professional judgement, management and those charged with governance, as appropriate, need to be aware of.

A69. The assurance practitioner's views on the judgemental areas of reporting the entity’s service performance may be particularly relevant to those charged with governance in discharging their responsibilities for the preparation of the service performance information. For example, why the assurance practitioner considers the service performance information not to be appropriate and meaningful. Open and constructive communication including feedback on the maturity of the entity’s process to prepare the service performance information, the service performance information selected by the entity or how the information compares to other entities may drive improvements over time. This may include comments about, for example, judgemental aspects of what service performance information to report on, concerns regarding management bias or the quality of the presentation of the information.