In a Type 2 Engagement, the Service Auditor Performs Tests

question 2

True/False

In a Type 2 engagement, the service auditor performs tests of the operating effectiveness of the controls, but does not have to perform any of the procedures performed in a Type 1 engagement.

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Definitions:

Nonrefundable Up-Front Fees

Payments made upfront for services that will not be returned, even if the service or product is not used or delivered as expected.

GAAP

Generally Accepted Accounting Principles; a set of accounting standards and practices used to prepare financial statements in the U.S.

Service Contract

A service contract is a legally binding agreement between two parties where one agrees to provide a specified service to the other for a payment.

SEC

The U.S. Securities and Exchange Commission, a federal agency that regulates the securities markets and protects investors.