ISA 402

ISA 402 – Introduction

Many entities outsource aspects of their business to organizations that provide services ranging from performing a specific task under the direction of an entity to replacing an entity’s entire business units or functions, such as the tax compliance function. Many of the services provided by such organizations are integral to the entity’s business operations; however, not all those services are relevant to the audit … Continue reading

ISA 402 – Objectives

The objectives of the user auditor, when the user entity uses the services of a service organization, are:

  1. To obtain an understanding of the nature and significance of the services provided by the service organization and their effect on the user entity’s internal control relevant to the audit, sufficient to identify and assess the risks of material misstatement; and
  2. To design and perform audit procedures responsive to those risks.

ISA 402 – Definitions

For purposes of the ISAs, the following terms have the meanings attributed below:

Complementary user entity controls: Controls that the service organization assumes, in the design of its service, will be implemented by user entities, and which, if necessary to achieve control objectives, are identified in the description of its system … Continue reading

ISA 402 – Requirements

Obtaining an Understanding of the Services Provided by a Service Organization, Including Internal Control

When obtaining an understanding of the user entity in accordance with ISA 315, the user auditor shall obtain an understanding of how a user entity uses the services of a service organization in the user entity’s operations, including … Continue reading

ISA 402 – Tests of Controls

When the user auditor’s risk assessment includes an expectation that controls at the service organization are operating effectively, the user auditor shall obtain audit evidence about the operating effectiveness of those controls from one or more of the following procedures … Continue reading


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