As part of the audit of Segal Enterprises, the external auditors, Hansen CPAs are meeting with client management to discuss which areas of the business are outsourced to third party firms. Management advises the auditors that they have recently outsourced their receivables function to a third-party service firm which now handles all recording and processing of receivables. As a result of this, which action would be the most appropriate for Hansen CPAs to take?

Group of answer choices

A. Hansen CPA Firm should advise the client's management that due to this function being outsourced, Hansen will need to obtain a Service Organization and Controls Report from whomever audits the firm the receivables are handled by.

B. Hansen CPA Firm should explain to client management that they will need to conduct a Service Organization and Controls audit, which comprises special audit procedures designed especially for outsourced client functions.

C. Hansen CPA Firm should document this notification, and should consider how this may affect their auditing of the accounts receivable function. Hansen will likely assign a special team to focus on the client's receivables, and may adjust the risk of material misstatement accordingly.

D. In response to this notification, Hansen CPA Firm should advise the client's management that due to the function being outsourced, Hansen will issue either a scope limitation or qualified opinion on the client's accounts receivable function, as they will not be able to audit this area.