In connection with the examination of the consolidated financial statements of Mott Industries, Frazier, CPA, plans to refer to another CPA's examination of the financial statements of a subsidiary company. Under these circumstances, Frazier's report must disclose:
A)the name of the other CPA and the type of report issued by the other CPA.
B)the portion of the financial statements examined by the other CPA.
C)the nature of Frazier's review of the other CPA's work.
D)in a footnote the portions of the financial statements that were covered by the examinations of both auditors.

Question

Quizplus · Accepted Answer

When a principal auditor decides to make reference to another auditor's work in their report, it is necessary to disclose the portion of the financial statements that was examined by the other auditor. This helps users of the financial statements understand the division of responsibility between the auditors involved.

In Connection with the Examination of the Consolidated Financial Statements