QUESTION 2 (32 marks) ABC Holdings is a medium-sized retail chain that has recently outsourced its data processing functions to DataSecure Ltd, a reputable service company specialising in IT infrastructure and data processing. The decision was made to improve data confidentiality and to reduce the costs associated with in-house data management. DataSecure Ltd handles payroll processing, financial data reconciliation, and inventory management. The internal audit department at ABC Holdings has been asked to evaluate DataSecure Ltd.'s controls and performance due to concerns over data privacy, potential errors in payroll processing, and delayed financial reconciliation reports. The audit team has limited access to DataSecure Ltd.'s internal controls, which requires them to conduct a comprehensive assessment based on service agreements, service level agreements ("SLA"), and any external evaluations provided. REQUIRED: 2.1 2.2 List and describe the key factors the audit team should consider in evaluating the service company's stability and reputation. (8 marks) List and discuss the critical components of the service agreement that ABC Holdings' audit team should review. Note: This includes responsibilities for data preparation, input or output deadlines, and consequences for failing to meet these deadlines. (8 marks) 2.3 Discuss how DataSecure Ltd.'s access to sensitive information could impact ABC Holdings' compliance and reputation. (8 marks) 6 HCGA232-1-Jan-Jun2025-SA1-TA-V3-29012025 2.4 Outline a strategy for the audit team to evaluate DataSecure Ltd.'s controls effectively. (8 marks)