- This topic has 5 replies, 4 voices, and was last updated 11 years, 9 months ago by .
-
Topic
-
Payroll Data Co. (PDC) processes payroll transactions for a retailer. Cook, CPA, is engaged to express an opinion
on a description of PDC’s internal controls implemented as of a specific date. These controls are relevant to the retailer’s internal control, so Cook’s report may be useful in providing the retailer’s independent auditor with information necessary to plan a financial statement audit. Cook’s report should:
a. Contain a disclaimer of opinion on the operating effectiveness of PDC’s controls.
b. State whether PDC’s controls were suitably designed to achieve the retailer’s objectives.
c. Identify PDC’s controls relevant to specific financial statement assertions.
d. Disclose Cook’s assessed level of control risk for PDC.
Ans: a
My confusion:
1. Why wold Cook disclaim an opinion on the effectiveness of control when they are specifically engaged to express an opinion on control?
2. So internal controls implemented as of a specific date is then an audit attestation engagement to just check on internal control implementation here and NOT an audit on internal control? if it is, then it makes sense.
Please correct me if i am wrong. thanks
- The topic ‘Audit when service org involved…’ is closed to new replies.