Section Introduction - ASA 402 - Audit Considerations Relating to Entities Using Service Organisations - April 2006 - Introduction

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Introduction

4 The purpose of this Auditing Standard is to establish mandatory requirements and to provide explanatory guidance to an auditor where the entity uses a service organisation(s). This Auditing Standard also describes the service organisation auditor’s reports which may be obtained by the entity’s auditors. In certain cases, the service organisation may, in turn, use the services of another service organisation(s) (sub-service organisation). Although this Auditing Standard does not specifically refer to a sub-service organisation, it applies to the services provided by the sub-service organisation.

5 The auditor shall consider how an entity’s use of a service organisation affects the entity’s internal control so as to identify and assess the risk of material misstatement and to design and perform further audit procedures.

6 An entity may use a service organisation such as one that executes transactions and maintains related accountability, or records transactions and processes related data (for example, a computer systems service organisation). If the entity uses a service organisation, certain policies, procedures and records maintained by the service organisation may be relevant to the audit of the financial report of the entity.