M5-Reporting on Controls at a Service Organization

Question 1

Reviewing the service auditor’s report on controls placed in operation would be the most efficient procedure when an audit client uses a service organization for several processes. (true or false)

Answer 1

true

Question 2

When a service organization provides services that affect the initiation, execution, processing, or reporting of a user company’s transactions, those services are considered to be part of the user company’s information system. (true or false)

Answer 2

true

Question 3

The user auditor would make inquiries regarding the professional reputation of the service auditor, not vice versa. (true or false)

Answer 3

true

Question 4

The “service auditor” should include in his or her report a description of the scope and nature of the procedures performed. (true or false)

Answer 4

true

Question 5

A Type 1 report on internal controls for a service organization should include management’s description of the service organization’s system. (true or false)

Answer 5

true

Question 6

The service auditor’s Type 1 report is not intended to provide evidence of operating effectiveness. That requires a Type II report. (true or false)

Answer 6

true