a.
Explain the impact of use of an external service provider to process financial statement transactions on the audit of the entity’s financial statements.
b.
Explain the options which are available to the auditor of the user entity’s financial statements to obtain information about the design of internal controls over financial reporting at the service organization.
c.
List the kind of report that could the auditor of the user entity obtain from the service organization, if the user auditor needed information about the operating effectiveness of controls at the service organization.
d.
Explain the type of report that might the service organization provide to management of an entity that uses the service center to process quality control reports related to the user entity’s manufacturing process.
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Auditing And Assurance Services
- Which of the following statements is most accurate? a. ERP systems are commercial software packages that are sometimes called turnkey systems because they can be implemented by the user with little or no modification. b. Substantive tests provide evidence focused on the system controls. c. Public accounting firms that provide attest services are not allowed under SOX to offer IT advisory services. d. Both small and large firms that have standardized information needs are potential customers for commercial software. e. External auditors may rely on the work of internal auditors only if they report to the controller or the CEO of the client company.arrow_forwardLamar LLC is in the process of updating its revenues and receivables systems with the implementation of new accounting software. James Loden, Inc. is an independent information technology consultant who is assisting Tamar with the project. James has developed the following checklist containing internal control points that the company should consider in this new implementation: Will different system access levels for different users be incorporated?arrow_forwardThe increasing use of sophisticated EDP systems has produced significant changes in the accounting environment. The changes are: The potential for individuals to gain unauthorized access to data or assets may be greater in computerized accounting systems than in manual systems. Required: Discuss the impact on the internal control system and the independent audit.arrow_forward
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