Question

A COMPANY HAS RECENTLY OURSOURCED ITS PAYROLL PROCESS TO A THIRD-PARTY SERVICE PROVIDER. AN AUDIT TEAM WAS SCHEDULED TO AUDIT PAYROLL CONTROLS IN THE ANNUAL AUDIT PLAN PREPARED PRIOR TO THE OUTSOURCING. WHAT ACTION SHOULD THE AUDIT TEAM TAKE, CONSIDERING THE OUTSOURCING DECISION?
A. CANCEL THE ENGAGEMENT, BECAUSE THE PROCESSING IS BEING PERFORMED OUTSIDE THE ORGANIZATION?
B. REVIEW ONLY THE CONTROLS OVER PAYMENTS TO THE THIRD-PARTY PROVIDER BASED ON THE CONTRACT
C. REVIEW ONLY THE COMPANY CONTROLS OVER DATA SENT TO AND RECEIVED FROM THE THIRD-PARTY SERVICE PROVIDER
D. REVIEW THE CONTROLS OVER PAYROLL PROCESSING IN BOTH THE COMPANY AND THE THE THIRD-PARTY SERVICE PROVIDER

Answer 1

C. The third party is a desperate business. If it sees a major flaw from the third party it could possibly take action but this isn't as much of a worry as one would think.