Abbot, as principal auditor for the consolidated financial report, finds that the audit of a major subsidiary is qualified by another auditor. Abbot does not consider the qualification to be material relative to the consolidated financial report. What recognition, if any, must Abbot make in his auditor's report to the qualified report of the auditor of the subsidiary?
A) He must refer to the qualification of the other auditor and qualify his report likewise.
B) He need make no reference.
C) He must include the other auditor's report with his report and give an explanation of its significance.
D) He must include the other auditor's report with his report but need not qualify his report.

Question

Quizplus · Accepted Answer

Since Abbot does not consider the qualification to be material, he can make no reference in his auditor's report to the qualified report of the auditor of the subsidiary. This is in accordance with Generally Accepted Accounting Principles (GAAP) and the Generally Accepted Auditing Standards (GAAS).

Abbot, as Principal Auditor for the Consolidated Financial Report, Finds