Costello, as principal auditor for the consolidated financial report, finds that the audit of a major subsidiary is qualified by another auditor.Costello does not consider the qualification to be material relative to the consolidated financial report.What recognition, if any, must Costello make in his auditor's report to the qualified report of the auditor of the subsidiary?

Question

Quizplus · Accepted Answer

Costello does not consider the qualification to be material, therefore he need not make any reference to the qualified report of the auditor of the subsidiary. However, if Costello were to determine that the qualification is material, he would need to refer to it in his own report.

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