A Type 2 Service Auditor's Report Addresses

question 31

Multiple Choice

A Type 2 service auditor's report addresses:

• A)Only management's description and design of its controls.
• B)Management's description and design of its controls and control operating effectiveness.
• C)Only control operating effectiveness.
• D)Control operating effectiveness and primary assertion reliability.

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Definitions:

Depreciation Tax Shield

The tax saving achieved by a company from deducting depreciation expenses on its taxable income.

Depreciation

The allocation of the cost of an asset over its useful life, reflecting the asset's consumption, wear and tear, or obsolescence.

Taxes

Mandatory financial charges or levies imposed by a government on individuals and organizations to fund public expenditures.

Profitability Index

A financial tool that calculates the relative profitability of an investment by dividing the present value of future cash flows by the initial investment cost.