A computer service centre processes, for an auditor's client, financial data that has a material effect on that client's financial statements.The independent auditor need NOT consider a review of the service centre controls if:
A) he or she is satisfied that a special report on internal controls issued by the service centre's independent auditor can be relied on to the extent desired.
B) the service centre is a partially owned subsidiary of the client company, whose financial statements are examined by another audit firm.
C) the service centre controls have already been reviewed by the internal audit team of the client.
D) the service centre processes data exclusively for the audit client and its subsidiaries.

Question

Quizplus · Accepted Answer

The auditor need not consider a review of the service centre controls if he/she can rely on a special report on internal controls issued by the service centre's independent auditor to the extent desired. This means that if the service centre's independent auditor has issued a reliable report on internal controls, the auditor need not duplicate the work and can rely on that report. Therefore, option A is the correct choice. The other options are not relevant for determining whether the auditor should consider a review of the service centre controls.

A Computer Service Centre Processes, for an Auditor's Client, Financial