Problem

In auditing ICFR for a public company, Emily finds that the entity has a significant subsi...

In auditing ICFR for a public company, Emily finds that the entity has a significant subsidiary located in a foreign country. Emily’s accounting firm has no offices in that country, and the entity has thus engaged another reputable firm to conduct the audit of internal control for that subsidiary. The other auditor’s report indicates that there are no material weaknesses in the foreign subsidiary’s ICFR. What should Emily do?

a. Disclaim an opinion because she cannot rely on the opinion of another auditor in dealing with a significant subsidiary.

b. Accept the other auditor’s opinion and express an unqualified opinion, making no reference to the other auditor’s report in her audit opinion.

c. Accept the other auditor’s opinion after evaluating the auditor’s work and make reference to the other auditor’s report in her audit opinion.

d. Qualify the opinion because she is unable to conduct the testing herself, and this constitutes a significant scope limitation.

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