An Audit Client's Decision to Outsource Its Data Processing Function

question 48

Multiple Choice

An audit client's decision to outsource its data processing function to an external service provider,would be of significant interest to the auditor,mostly because:

• A)It would impact on the auditor's assessment of management integrity.
• B)It would impact on the design and effectiveness of the client's internal control system,which would in turn affect the assessed risk of material misstatement.
• C)It would result in a major increase to the audit fee.
• D)It results in a shift in responsibilities away from the auditee's management to that of the service provider.

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Definitions:

Conception

The process of a sperm fertilizing an ovum, leading to the formation of a zygote and the beginning of pregnancy.

Forebrain

Evolutionarily the most recent addition to the brain; coordinates advanced cognitive functions such as thinking, planning, and language; contains the allocortex, neocortex, and basal ganglia.

Midbrain

Central part of the brain; contains neural circuits for hearing and seeing as well as for orienting movements.

Hindbrain

Evolutionarily the oldest part of the brain; contains the pons, medulla, reticular formation, and cerebellum, the structures that coordinate and control most voluntary and involuntary movements.