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 (an):

Question

Quizplus · Accepted Answer

Choice "A" is correct. Price, CPA (the "service auditor") should include in his or her report a description of the scope and nature of the procedures performed. Choices "B" and "D" are incorrect. A report on controls placed in operation does not provide an opinion on operating effectiveness, and therefore may not be used to assess control risk. Choice "C" is incorrect. A report on controls placed in operation includes a statement that, "our examination included procedures to obtain reasonable assurance about whether the controls were suitably designed."

Dunn, CPA, Is Auditing the Financial Statements of Taft Co