A. Issues an unqualified opinion on the consolidated financial statements.
B. Learns that the other CPA issued an unqualified opinion on the subsidiary's financial
statements.
C. Is unable to review the audit programs and audit documentation of the other CPA.
D. Is satisfied as to the independence and professional reputation of the other CPA.

Answer(s): D
Explanation:
Choice "d" is correct. If, among other requirements, the principal auditor is satisfied as to the
independence and the professional reputation of the other auditor, the principal auditor may
express an opinion on the financial statements taken as a whole without making reference to
the audit of the other auditor. Choice "a" is incorrect. Whether or not an unqualified opinion is
issued is not the determining factor as to whether the principal auditor must make reference to
another CPA. Choice "b" is incorrect. Whether or not an unqualified opinion is issued on the
subsidiary's financial statements is not the determining factor as to whether the principal auditor
must make reference to another CPA. Choice "c" is incorrect. If the principal auditor is unable to
review the audit programs and audit documentation of the other CPA, he or she is likely to
divide responsibility by making reference to the other CPA in the auditor's report.
QUESTION: 53
A limitation on the scope of an audit sufficient to preclude an unqualified opinion wil usually
result when management:

A. Is unable to obtain audited financial statements supporting the entity's investment in a foreign
subsidiary.
B. Refuses to disclose in the notes to the financial statements related party transactions
authorized by the Board of Directors.
C. Does not provide the auditor with an engagement letter specifying the responsibilities of both
the entity and the auditor.
D. Fails to correct a significant deficiency in internal control communicated to those charged
with governance after the prior year's audit.

Answer(s): A
Explanation:
Choice "a" is correct. Restrictions on the scope of the audit, such as the timing of the work, the
inability to obtain sufficient appropriate audit evidence, or an inadequacy in the accounting
records, may require the auditor to qualify or disclaim an opinion. Inability to obtain audited
financial statements supporting the entity's investment in a foreign subsidiary is such a
restriction on the scope of the audit. Choice "b" is incorrect. Client refusal to disclose related
party transactions in the notes to the financial statements is a GAAP problem, not a scope
problem. For a GAAP problem, the auditor must either issue a qualified or adverse opinion.
Choice "c" is incorrect. The auditor sends an engagement letter to the client, not vice versa.
Choice "d" is incorrect. Management may choose not to correct a significant deficiency in
internal control if the cost of correcting the condition outweighs the benefit.
QUESTION: 54
In which of the following situations would an auditor ordinarily choose between expressing an
"except for" qualified opinion or an adverse opinion?
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