Document ID: chunk:federal_register_of_legislation:F2023C01156:reg:14:p8
Version: federal_register_of_legislation:F2023C01156
Segment Type: reg
Provision Reference: reg 14 (pt 8/22)
Character Range: 27088–30312

work of a service auditor in the user auditor's report containing an unmodified opinion unless required by law or regulation to do so.  If such reference is required by law or regulation, the user auditor's report shall indicate that the reference does not diminish the user auditor's responsibility for the audit opinion.  (Ref: Para. A43)

22.               If reference to the work of a service auditor is relevant to an understanding of a modification to the user auditor's opinion, the user auditor's report shall indicate that such reference does not diminish the user auditor's responsibility for that opinion.  (Ref: Para. A44)

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Application and Other Explanatory Material

Obtaining an Understanding of the Services Provided by a Service Organisation, Including Internal Control

Sources of Information (Ref: Para. 9)

A1.             Information on the nature of the services provided by a service organisation may be available from a wide variety of sources, such as:

           * User manuals.

           * System overviews.

           * Technical manuals.

           * The contract or service level agreement between the user entity and the service organisation.

           * Reports by service organisations, the internal audit function or regulatory authorities on controls at the service organisation.

           * Reports by the service auditor, including management letters, if available.

A2.             Knowledge obtained through the user auditor's experience with the service organisation, for example through experience with other audit engagements, may also be helpful in obtaining an understanding of the nature of the services provided by the service organisation.  This may be particularly helpful if the services and controls at the service organisation over those services are highly standardised.

Nature of the Services Provided by the Service Organisation (Ref: Para. 9(a))

A3.             A user entity may use a service organisation such as one that processes transactions and maintains related accountability, or records transactions and processes related data.  Service organisations that provide such services include, for example, bank trust departments that invest and service assets for employee benefit plans or for others; mortgage bankers that service mortgages for others; and application service providers that provide packaged software applications and a technology environment that enables customers to process financial and operational transactions.

A4.             Examples of service organisation services that are relevant to the audit include:

           * Maintenance of the user entity's accounting records.

           * Management of assets.

           * Initiating, recording or processing transactions as agent of the user entity.

Considerations Specific to Smaller Entities

A5.             Smaller entities may use external bookkeeping services ranging from the processing of certain transactions (for example, payment of payroll taxes) and maintenance of their accounting records, to the preparation of their financial report.  The use of such a service organisation for the preparation of its financial report does not relieve management of