When an Audit Client Uses a Service Organization,the Auditor Is

question 103

Multiple Choice

When an audit client uses a service organization,the auditor is required to

• A)have appropriate competence and capabilities to review the service organization
• B)obtain an understanding of the nature and significance of the services provided by the service organization and the design and operation of the relevant controls performed by the service organization
• C)comply with relevant independence and fraud detection requirements
• D)maintain professional appearance and exercise professional judgment

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Definitions:

High-low Method

A technique used in managerial accounting to estimate variable and fixed cost components of a cost by analyzing the highest and lowest activity levels.

Electrical Cost

Electrical cost refers to the expenses incurred from the use of electricity, often a significant component of utility costs for homes and businesses.

Machine-hour

A measure of the amount of time a machine is run, often used as a basis for allocating manufacturing overhead to products.

High-low Method

A technique used in cost accounting to estimate fixed and variable costs associated with production by using the highest and lowest levels of activity.