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 management’s description of the controls implemented and their suitability of design 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(n)
Description of the scope and nature of Price’s procedures.
A service auditor’s report (type 1 report) includes (1) a title that includes the word independent; (2) an addressee; (3) identification of management’s description of the system; (4) a reference to management’s assertion and a statement of the management’s responsibility for the controls; (5) a statement that the service auditor’s responsibility is to express an opinion on the fairness of management’s description of the system and the suitability of the design of the controls in meeting the objectives; (6) a statement that the report was conducted in accordance with the AICPA attestation standards; (7) a statement that the service auditor did not test the effectiveness of the controls; (8) statements about the scope of the service auditor’s procedures; (9) a statement about the inherent limitations of controls; (10) an opinion on whether, in all material respects, management’s description of the system is fairly stated and whether the controls are suitably designed; (11) a statement restricting the use of the report to management of the service organization and user entities; (12) the date of the report; and (13) the name, city, and state of the service auditor (AT 801).