When a client uses an outside payroll service for processing payroll, professional auditing standards require the auditor to rely on the internal controls of the service organization if the service organization's auditor has issued a favorable report on internal controls.

Question

Quizplus · Accepted Answer

Auditors are not required to rely on the internal controls of a service organization even if there is a favorable report; they may choose to perform their own procedures to gain assurance.

When a Client Uses an Outside Payroll Service for Processing