Which of the Following Is Not True

question 55

Multiple Choice

Which of the following is not true?

• A) Management may outsource their organizations' IT functions, but they cannot outsource their management responsibilities for internal control.
• B) Section 404 requires the explicit testing of outsourced controls.
• C) The SAS 70 report, which is prepared by the outsourcer's auditor, attests to the adequacy of the vendor's internal controls.
• D) Auditors issue two types of SAS 70 reports: SAS 70 Type I report and SAS 70 Type II report.

---

Definitions:

Field Warehouse Loan

A form of short-term financing where a lender provides a loan with inventory as collateral, which is stored on the borrower's premises but controlled by an independent third party.

Marketable Securities

Financial instruments that can be quickly converted into cash at market value, including stocks and bonds.

Raw Materials

Basic materials that are used in the production process of manufacturing goods, including metals, oil, grains, and other commodities.

Cash Discounts

Incentives offered by sellers to buyers for paying their invoices early, typically a percentage reduction in the invoice amount.