A Computer Service Centre Processes, for an Auditor's Client, Financial

question 31

Multiple Choice

A computer service centre processes, for an auditor's client, financial data that has a material effect on that client's financial statements.The independent auditor need NOT consider a review of the service centre controls if:

• A) he or she is satisfied that a special report on internal controls issued by the service centre's independent auditor can be relied on to the extent desired.
• B) the service centre is a partially owned subsidiary of the client company, whose financial statements are examined by another audit firm.
• C) the service centre controls have already been reviewed by the internal audit team of the client.
• D) the service centre processes data exclusively for the audit client and its subsidiaries.

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Definitions:

Cost Basis

The original value of an asset for tax purposes, usually the purchase cost, adjusted for stock splits, dividends, and return of capital distributions.

Unanimous Consent

An agreement method where all parties involved must agree entirely on a decision or action.

Net Assets

The total assets of a company minus its total liabilities, representing the shareholders' equity or ownership interest.

Equity Investments

Investments in the equity of other companies, representing ownership interests that offer potential dividends and capital gains.