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:

Budget Line

A graphical representation of all possible combinations of two goods that an individual can afford given the prices of the goods and the individual's income.

Decrease In Income

A reduction in the amount of money earned or received by an individual or household.

Consumer Purchases

Transactions made by individuals or households for goods and services for personal use.

Products

Tangible or intangible goods offered by businesses to consumers in exchange for payment.