Many Clients Have Outsourced the IT Functions

question 92

Multiple Choice

Many clients have outsourced the IT functions. The difficulty the independent auditor faces when a computer service center is used is to:

• A) gain the permission of the service center to review their work.
• B) find compatible programs that will analyze the service center's programs.
• C) determine the adequacy of the service center's internal controls.
• D) try to abide by the Code of Professional Conduct to maintain the security and confidentiality of client's data.

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Definitions:

Long-Term Debt

Financial obligations of a company that are due more than one year in the future, often used for significant projects or to purchase assets.

Debt-Equity Ratio

A ratio indicating a firm's financial leverage, determined by dividing its total debts by its shareholder equity.

Accounts Receivable Turnover

A financial ratio that measures how efficiently a company collects revenue from its customers by dividing total net credit sales by the average accounts receivable.

Net Working Capital

This is a measure of a company's liquidity, calculated as the difference between its current assets and current liabilities.