Lake, CPA, is auditing the financial statements of Gill Co. Gill uses the EDP Service Center, Inc. to process its payroll transactions.

Lake, CPA, is auditing the financial statements of Gill Co. Gill uses the EDP Service Center, Inc. to process its payroll transactions. EDP’s financial statements are audited by Cope, CPA, who recently issued a report on EDP’s internal control. Lake is considering Cope’s report on EDP’s internal control in assessing control risk on the Gill engagement. What is Lake’s responsibility concerning making reference to Cope as a basis, in part, for Lake’s own opinion?

a. Lake may refer to Cope only if Lake is satisfied as to Cope’s professional reputation and independence.

b. Lake may refer to Cope only if Lake relies on Cope’s report in restricting the extent of substantive tests.

c. Lake may refer to Cope only if Lake’s report indicates the division of responsibility.

d. Lake may not refer to Cope under the circumstances above.

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