The CPA firm of May & Marty has audited the consolidated financial statements of BGFI Corporation, a private company. May & Marty examined the parent company and all subsidiaries except for BGI- Western Corporation, which was audited by the CPA firm of Dey & Dee. BGI- Western constituted approximately 10 percent of the consolidated assets and 6 percent of the consolidated revenue.
Dey & Dee issued an unmodified opinion on the financial statements of BGI- Western. May & Marty will be issuing an unmodified opinion on the consolidated financial statements of BGI.
a. What procedures should May & Marty consider performing with respect to Dey & Dee’s examination of BGI- Western’s financial statements regard-less of whether reference is to be made to the other auditors?
b. Describe the various circumstances under which May & Marty could take responsibility for the work of Dey & Dee and make no reference to Dey & Dee’s examination of BGI- Western in its own report on the consolidated financial statements of BGI.