When Auditing a Client Whose Information Is Processed by an Outside

question 51

True/False

When auditing a client whose information is processed by an outside service provider, it is not acceptable for the auditor to rely on the audit report of another independent auditor who has previously tested the internal controls of the service provider, rather than testing the service provider's controls himself or herself.

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Definitions:

Significance Level

The criterion used for rejecting the null hypothesis, representing the probability of committing a Type I error.

Critical Value

A critical value is a point on the distribution of a statistical test that marks the boundary of the rejection area for the null hypothesis, aiding in decision making regarding statistical significance.

Wilcoxon Rank Test

A nonparametric statistical test used to compare two related samples, to assess whether their population means ranks differ.

Nonparametric Tests

Statistical tests that do not assume a specific distribution for the data, making them appropriate for non-normal data distributions or ordinal and nominal data.