Your audit client owns several fast food restaurants. Below are excerpts from Section 4 of a SOC 1, Type 2 report. Control Objective 2: Controls provide reasonable assurance that payroll processed is authorized, completed, and data transmitted in accordance with client specifications.

Required

a. Identify the assertion(s) affected by controls 2.01 and 2.02. 

b. Explain how the information provided in the SOC 1, Type 2 audit report will influence audit strategy based on the service auditors’ testing of controls 2.01 and 2.02. 

c. Assume that you are assigned to the audit of a fast food franchise. Most employees are paid hourly, and your firm wants to know if its control activities provide assurance that employees are being paid for hours actually worked. What control might you expect to find at either the service organization or the user organization?

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2.01 2.02 Control Activity Specified by the Service Organization The service organization pay- roll processors verify that the data received from the client agree with the data processed by the service organization software by comparing the data to control totals that the client provides. Service organization software calculates gross payroll and net payroll using tax tables built into the software and client- defined deductions input by the client. Test Applied by the Service Auditor Test Results Reviewed logs verifying data No exceptions noted. received from the client agree with the data processed. Reper- formed control on a sample basis. We tested software with pre- defined data to determine that software properly calculated gross and net payroll. No exceptions noted.