When a Client Uses a Service Center for Processing Transactions

question 23

Multiple Choice

When a client uses a service center for processing transactions,

• A)the auditor can assume that the controls are adequate because it is an independent enterprise.
• B)auditing standards require the auditor to test the service center's controls if the service center application involves processing significant financial data.
• C)and the user auditor decides to rely on the service auditor's report,the user audit must make reference to the report of the service auditor in the opinion on the user organization's financial statements.
• D)none of the above

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Definitions:

Production Costs

Direct costs associated with the manufacturing of goods, including labor, materials, and overhead expenses.

Variable Manufacturing Costs

Expenses that vary directly with the level of production, such as raw materials and labor.

Book Value

The net value of a company's assets, calculated by subtracting its liabilities from its total assets.

Market Value

The current price at which an asset or service can be bought or sold in the open market.