Problem 2

With the rapid growth of cloud computing, many organizations are contracting with third party service

providers to process and store all kinds of data off site. In doing so, entities are now dependent on the

effectiveness of controls provided by external software providers and data centers that are used to

generate and store a huge volume of data of important information for making critical decisions.

1 What challenges do you see the auditor faced with when auditing a client who is using external

services?

2 How might the use of an external service provider to process financial statement transactions affect

the audit of the entitys financial statements?

3 Provide five audit procedures you as an auditor would design to address the issues you named in

question 1