Outsourcing:
A) affects the ICFR of the organization doing the outsourcing.
B) if significant, the auditor must consider the controls that surround the service provider.
C) payroll is not considered significant.
D) Both a and b.

Question

Quizplus · Accepted Answer

Outsourcing can affect the internal control over financial reporting (ICFR) of the organization doing the outsourcing. If the outsourcing is significant, the auditor must consider the controls that surround the service provider. Payroll outsourcing can also be significant and impact ICFR, so it is not correct to say that payroll is not considered significant. Therefore, both statements A and B are correct.