AICPA CPA-Auditing Exam - Topic 2 Question 123 Discussion

Actual exam question for AICPA's CPA-Auditing exam

Question #: 123
Topic #: 2

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):

ADescription of the scope and nature of Price's procedures.

BStatement that Dunn may assess control risk based on Price's report.

CAssertion that Price assumes no responsibility to determine whether QSC's controls are suitably designed.

DOpinion on the operating effectiveness of QSC's internal controls.
Explanation
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.'

Show Suggested Answer

Suggested Answer: A

by Mabel at Apr 06, 2026, 04:50 AM

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Selma

4 days ago

I practiced a similar question where we had to identify what a service auditor's report should include. I think it was about the nature of the procedures too.

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Glynda

9 days ago

I’m a bit unsure about the wording in the options. I think Price's report should definitely describe the scope, but I can't recall if it also mentions control risk.

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Cornell

14 days ago

I remember discussing how service auditor reports focus on the description of procedures rather than opinions on effectiveness.

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