Document ID: chunk:federal_register_of_legislation:F2023C01156:reg:14:p12
Version: federal_register_of_legislation:F2023C01156
Segment Type: reg
Provision Reference: reg 14 (pt 12/22)
Character Range: 38282–41136

relation to the user entity's use of the service organisation, may be influenced by such matters as:

           * The size of both the user entity and the service organisation;

           * The complexity of the transactions at the user entity and the complexity of the services provided by the service organisation;

           * The location of the service organisation (for example, the user auditor may decide to use another auditor to perform procedures at the service organisation on the user auditor's behalf if the service organisation is in a remote location);

           * Whether the procedure(s) is expected to effectively provide the user auditor with sufficient appropriate audit evidence; and

           * The nature of the relationship between the user entity and the service organisation.

A16.         [Deleted by the AUASB.  Refer Aus A16.1].[9]

Aus A16.1 A service organisation may engage a service auditor to report on the description and design of its controls (type 1 report) or on the description and design of its controls and their operating effectiveness (type 2 report).

A17.         The availability of a type 1 or type 2 report will generally depend on whether the contract between a service organisation and a user entity includes the provision of such a report by the service organisation.  A service organisation may also elect, for practical reasons, to make a type 1 or type 2 report available to the user entities.  However, in some cases, a type 1 or type 2 report may not be available to user entities.

A18.         In some circumstances, a user entity may outsource one or more significant business units or functions, such as its entire tax planning and compliance functions, or finance and accounting or the control function to one or more service organisations.  As a report on controls at the service organisation may not be available in these circumstances, visiting the service organisation may be the most effective procedure for the user auditor to gain an understanding of controls at the service organisation, as there is likely to be direct interaction of management of the user entity with management at the service organisation.

A19.         Another auditor may be used to perform procedures that will provide the necessary information about the relevant controls at the service organisation related to services provided to the user entity.  If a type 1 or type 2 report has been issued, the user auditor may use the service auditor to perform these procedures as the service auditor has an existing relationship with the service organisation.  The user auditor, using the work of another auditor, may find the guidance in ASA 220[10] useful as it relates to determining the competence and capabilities of the other auditor (including that auditor's independence), the direction and supervision