What is the purpose of the inclusive method in the context of auditing?

The purpose of the inclusive method in the context of auditing is specifically to assess the services provided by a subservice organization. This method is utilized when an organization outsources certain functions to another entity, known as a subservice organization. The inclusive approach allows auditors to evaluate the effectiveness and reliability of these outsourced services, ensuring that they align with the overall control environment of the primary organization.

When auditors apply the inclusive method, they incorporate the controls of the subservice organization into the overall audit process. This is essential because the reliability of the primary organization’s controls may depend significantly on the effectiveness of the subservice organization’s controls, especially if the subservice organization plays a critical role in the delivery of services or production of goods.

By thoroughly assessing these services and controls, auditors can provide assurance about the overall risk management processes and internal control effectiveness. This is particularly important in scenarios involving financial reporting, compliance, or any critical areas where the outsourced services could impact the primary organization's operational integrity. Thus, this method plays a vital role in understanding the risks associated with third-party relationships and helps ensure that the financial statements provide a true and fair view.