When a Client Uses a Service Center for Processing Transactions

question 17

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 auditor 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:

Interpretation

An expression of the meaning or significance of a wide variety of experiences, situations, data, events, judgments, conventions, beliefs, rules, procedures, or criteria.

Inference

Identifies and secures elements needed to draw reasonable conclusions; it forms conjectures and hypotheses, it considers relevant information, and it reduces or draws out the consequences flowing from data, statements, principles, evidence, judgments, beliefs, opinions, concepts, descriptions, questions, or other forms of representation.

Spontaneous Generation

The outdated belief that living organisms can arise from non-living matter without any biological process.

Disconfirmed

Refuted or shown to be false, especially in relation to hypotheses or beliefs.