When Auditing a Client Whose Information Is Processed by an Outside

question 30

True/False

When auditing a client whose information is processed by an outside computer service company, it is acceptable for the auditor to rely on the audit report of another independent auditor who has previously tested the internal controls of the computer service centre rather than testing the service centre's controls himself or herself.

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Definitions:

Target Costing

A cost management strategy whereby a product’s selling price is considered in designing and developing a product, with an intent to manage costs and maintain profitability.

Desired Return

The minimum return that an investor, project, or business aims to achieve from an investment or venture, factoring in risk and opportunity cost.

Investment

The act of allocating resources, usually money, in the expectation of generating an income or profit.

Absorption Costing

A financial recording technique that entails incorporating all costs associated with manufacturing, whether they are fixed or variable, into the product's pricing.