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AICPA CPA-Auditing Exam - Topic 2 Question 123 Discussion

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):
A) Description of the scope and nature of Price's procedures.
B) Statement that Dunn may assess control risk based on Price's report.
C) Assertion that Price assumes no responsibility to determine whether QSC's controls are suitably designed.
D) Opinion 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.'

AICPA CPA-Auditing Exam - Topic 2 Question 123 Discussion

Actual exam question for AICPA's CPA-Auditing exam
Question #: 123
Topic #: 2
[All CPA-Auditing Questions]

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):

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Suggested Answer: A

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

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Vernell
5 hours ago
I think the answer is A. It makes sense to describe the procedures.
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Dwight
5 days ago
Just a description? Seems too simple for such an important role.
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Lili
11 days ago
I thought they had to assess control risk based on that report.
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Dana
16 days ago
Wait, so no opinion on effectiveness? That seems odd.
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Cecilia
2 months ago
Totally agree, that's a key part of the report!
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Lettie
2 months ago
Price's report needs to describe the scope of procedures.
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Catarina
3 months ago
I thought that the report would include an opinion on the effectiveness of controls, but now I see that it only describes the controls in place.
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Selma
3 months 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
3 months 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
4 months ago
I remember discussing how service auditor reports focus on the description of procedures rather than opinions on effectiveness.
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