When an Audit Client Uses a Service Organization to Manage

question 127

Multiple Choice

When an audit client uses a service organization to manage their investment activity,

• A) the auditor can always rely on the internal controls of the service organization.
• B) the auditor must state in their audit opinion that the client uses a service organization.
• C) the auditor can rely on the internal controls of the service organization if the service organization's auditor issues a report on their internal control.
• D) the auditor must rely on the service organization to determine the fair level 1, 2, and 3 estimates.

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Definitions:

Primary Emotions

Emotions that are present in humans and other animals, and emerge early in life; examples are joy, anger, sadness, fear, and disgust.

Interest

The feeling of wanting to learn more about something or to be involved in something; also refers to a charge for borrowing money.

Self-Conscious Emotions

Emotions that require self-awareness, especially consciousness and a sense of “me”; examples include jealousy, empathy, and embarrassment.

Cognitive Reversals

The ability to switch perspectives or understanding that actions can be undone mentally, an important part of cognitive development.