Page 174 - Auditing Standards

As of December 15, 2017

.C7 If the auditor concludes that he or she cannot express an opinion because there has been a limitation

on the scope of the audit, the auditor should communicate, in writing, to management and the audit
committee that the audit of internal control over financial reporting cannot be satisfactorily completed.

.C8 Opinions Based, in Part, on the Report of Another Auditor. When another auditor has audited the
financial statements and internal control over financial reporting of one or more subsidiaries, divisions,
branches, or components of the company, the auditor should determine whether he or she may serve as the

principal auditor and use the work and reports of another auditor as a basis, in part, for his or her opinion. AS
1205, Part of the Audit Performed by Other Independent Auditors, provides direction on the auditor's decision
of whether to serve as the principal auditor of the financial statements. If the auditor decides it is appropriate
to serve as the principal auditor of the financial statements, then that auditor also should be the principal

auditor of the company's internal control over financial reporting. This relationship results from the
requirement that an audit of the financial statements must be performed to audit internal control over financial
reporting; only the principal auditor of the financial statements can be the principal auditor of internal control

over financial reporting. In this circumstance, the principal auditor of the financial statements must participate
sufficiently in the audit of internal control over financial reporting to provide a basis for serving as the principal
auditor of internal control over financial reporting.

.C9 When serving as the principal auditor of internal control over financial reporting, the auditor should
decide whether to make reference in the report on internal control over financial reporting to the audit of

internal control over financial reporting performed by the other auditor. In these circumstances, the auditor's
decision is based on factors analogous to those of the auditor who uses the work and reports of other
independent auditors when reporting on a company's financial statements as described in AS 1205.

.C10 The decision about whether to make reference to another auditor in the report on the audit of internal
control over financial reporting might differ from the corresponding decision as it relates to the audit of the
financial statements. For example, the audit report on the financial statements may make reference to the

audit of a significant equity investment performed by another independent auditor, but the report on internal
control over financial reporting might not make a similar reference because management's assessment of
internal control over financial reporting ordinarily would not extend to controls at the equity method investee. 1

.C11 When the auditor decides to make reference to the report of the other auditor as a basis, in part, for his
or her opinion on the company's internal control over financial reporting, the auditor should refer to the report
of the other auditor when describing the scope of the audit and when expressing the opinion.

.C12 Management's Annual Report on Internal Control Over Financial Reporting Containing Additional
Information. Management's annual report on internal control over financial reporting may contain information

in addition to the elements described in paragraph .72 that are subject to the auditor's evaluation.

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