What is the BEST way to evaluate a control environment where the organization and a third party have shared responsibility?
What is the BEST way to evaluate a control environment where the organization and a third party have shared responsibility?
When considering a control environment involving both an organization and a third party with shared responsibilities, reviewing complementary user entity controls is the most effective method. Complementary user entity controls are the controls implemented by the organization that work in conjunction with the controls of the third-party service provider. Evaluating these controls enables a comprehensive understanding of how both parties contribute to achieving the control objectives, ensuring that all aspects of control are covered and duly addressed.
D: Complementary user entity controls (CUECs) are essentially controls provided by a third-party service provider to help achieve the vendor’s control objectives. CUECs can be thought of as a laundry list of controls and activities that customers or clients of a service provider must have in place to receive services. Complementary user entity controls (CUECs) are controls that exist on a user-entity level in a vendor company. CUECs ensure that an agreement to agreed-upon requirements binds clients’ or customers’ access to specific services.
Answer B
On-site evaluation is the best way to evaluate a control environment .
Reviewing complementary user entity controls involves assessing the controls implemented by the organization that complement the controls provided by the third party. This approach allows the auditor to evaluate the overall effectiveness of the control environment by considering how both parties contribute to achieving control objectives.