When Services Are Outsourced to a Third Party Service Provider

question 35

Multiple Choice

When services are outsourced to a third party service provider that significantly impact financial reporting,what should the auditor do to gain evidence over the operating effectiveness of the internal controls at the third party?

• A)Review the Type 2 Service Auditor's report (Report on the suitability of the design and operating effectiveness of controls of a service organization).
• B)Review the Type 1 Service Auditor's report (Report on the suitability of the design of controls of a service organization).
• C)Obtain a comfort letter from the third party on their internal controls.
• D)Review the independent auditor's report for the third party.

Grasp the interpretation of standard deviation in the context of different distributions and its comparison through the use of the coefficient of variation.

Understand the importance and functions of strategic planning in nonprofit organizations.

Identify the tools and models used in strategic planning and organizational assessment.

Recognize the roles of different stakeholders in the strategic planning process.

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Definitions:

Expenses

Costs incurred in the process of earning revenue, which are subtracted from revenues to calculate net income.

Financial Statements

Formal records of the financial activities and position of a business, person, or other entity.

Balance Sheet

A financial statement that provides a snapshot of a company’s financial position, showing assets, liabilities, and shareholders' equity at a specific point in time.

Income Statement

A financial statement that shows a company's revenues and expenses over a specific period, indicating the net profit or loss.