Recently, several states have outsourced some of the services traditionally provided by government employees. In one state, the Department of Health and Human Services has outsourced its electronic...

Recently, several states have outsourced some of the services traditionally provided by government employees. In one state, the Department of Health and Human Services has outsourced its electronic benefit transfer services to eFunds Inc. Under the contract, eFunds Inc. handles the electronic distribution of food stamp programs, including transaction processing, reporting, contract management, contract settlement, operations support, help desk services, and project management. For cost reasons, eFunds, Inc. sent the work to five offshore service centers it owns in India.

You are an auditor in the state’s internal auditing department. Identify the risks that this arrangement introduces to the state’s Department of Health and Human Services.