The auditor’s responsibility section of an auditor’s report contains the following: “We did not audit the financial statements of EZ, Inc., a wholly owned subsidiary, which statements reflect total assets and revenues constituting 27% and 29%, respectively, of the related consolidated totals. Those statements were audited by other auditors, whose report has been furnished to us, and our opinion, insofar as it relates to the amounts included for EZ, Inc., is based solely on the report of the other auditors.” These sentences
Assume no responsibility for the audit of the component auditor.
The quoted language is adapted from the auditor’s responsibility section in an example of an auditor’s report (AU-C 600). It illustrates the reporting by a group auditor who is referring to the audit of a component auditor. The group auditor’s report should clearly indicate that the component was not audited by the group auditor. It also should state (1) that the component was audited by the component auditor and (2) the magnitude of the portion audited. However, the ISAs do not permit a reference to a component auditor unless required by law or regulation.