[Biff-1955-Tannen]

I understand that A is correct, but am I missing something here, or would D not be correct also? Does it not say D right in the reasoning it provides?

Dunn, CPA, is auditing the financial statements of Taft Co. Taft uses Quick Service Center (QSC) to process its payroll. Price, CPA, is expressing an opinion on a description of the controls placed in operation at QSC regarding the processing of its customers’ payroll transactions. Dunn expects to consider the effects of Price’s report on the Taft engagement. Price’s report should contain:

A.

a description of the scope and nature of Price’s procedures.

B.

a statement that Dunn may assess control risk based on Price’s report.

C.

an assertion that Price assumes no responsibility to determine whether QSC’s controls are suitably designed.

Incorrect D.

an opinion on the operating effectiveness of QSC’s internal controls.

“A service auditor’s report expressing an opinion on a description of controls placed in operation at a service organization should contain a description of the scope and nature of the service auditor’s procedures.”

AUD 93 Jan 16
BEC 83 Feb 16
FAR 83 Apr 16
REG 84 May 16

99% Ninja MCQ only

[FAR_WARS]

It has to do with the EFFECTIVENESS of controls. A service auditor may provide an opinion on the description of controls, but not on their operating effectiveness.

FAR- 80
BEC- 75
AUD- 78
REG- ?

[Biff-1955-Tannen]

Ah! tricky. Thank you

AUD 93 Jan 16
BEC 83 Feb 16
FAR 83 Apr 16
REG 84 May 16

99% Ninja MCQ only

[monikernc]

This question is about Price CPA's report on a service organizations controls. This is an attestation engagement that can result in a type 1 or type 2 report both of which express an opinion on management's assertions/statements on its internal controls. The question describes a type 1 report and answer D is incorrect because operating effectiveness is only discussed/opined in a type 2 report.

FAR 7/25/15 76!
AUD 10/30/15 93
BEC 2/27/16 82
REG 5/23/16 88!
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