Question: Payroll Processed by a Service Organization Assume that you are

Payroll Processed by a Service Organization. Assume that you are the audit senior conducting a review of a new client’s payroll system. In the process of interviewing the payroll department manager, she makes the following statement: “We don’t need many controls because our payroll is done outside the company by Automated Information Processing, a service bureau.”

Evaluate the payroll department manager’s statement and describe how a service organization affects an auditor’s review of controls.

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