When a Client Uses a Service Organization to Process Certain

question 69

Multiple Choice

When a client uses a service organization to process certain transactions (e.g.,its employee benefit plan) ,the auditor is least likely to obtain an understanding relating to these transactions by

• A)Contacting the service organization to obtain specific information.
• B)Visiting the service organization and performing procedures.
• C)Sending a confirmation request to the service organization
• D)Obtaining and reading a type 1 or type 2 report from the service organization.

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Definitions:

Aggregate Demand

The aggregate requirement for all products and services within an economy, measured at a specific overall price level and during a certain time frame.

U.S. Government Securities

Financial instruments issued by the U.S. Department of the Treasury or other federal government agencies to finance federal spending, including Treasury bonds, notes, and bills.

Bank Reserves

The amounts of funds that a bank holds in its reserve account with the central bank or as cash in vault, to meet any sudden withdrawals.

Market Rate

The prevailing price or interest rate at which goods, services, or securities are bought and sold in a competitive marketplace.