Other auditors of subsidiaries You are currently performing the year-end audit of South Seas Ltd, a large corporation with operations in Australia and the South Pacific region. The company's head office is located in Melbourne. As part of the planning process, other offices of your firm and other non-associated overseas firms were engaged to conduct the audit of various branches and subsidiaries of South Seas Ltd. The deadline for all work to be completed by those other auditors was last Friday. It is now Monday and the company requires audit clearance by the end of the week.

You have been assigned the task of reviewing the work that has been performed by those other auditors and have noted the following.

1. Bluewater Ltd is a subsidiary located in Fiji. No results have been received as yet from the other audit firm involved. You have just spoken to the audit partner in Fiji who has told you that, although the work has not yet been completed, no major problems have been encountered. Bluewater contributes 12% of total sales and 8% of net assets in the consolidated accounts.

2. When reviewing work performed by the New Zealand office, you find the stocktake, which should have been performed on 30 June, actually took place on 2 July. The other auditor's explanation for this was that instructions had not been received in sufficient time for them to allocate staff.

3. The Cairns office, which performed the audit of Sugar Supplies Pty Ltd (a subsidiary in which South Seas owns 80% of the issued capital), established its own materiality on the basis of the year-end amounts recorded in Sugar Supplies' books and found no material errors or misstatements.

Required

a. Discuss the issues your firm would need to consider when relying on the work of the other auditors.

b. Identify the specific issues you would raise in relation to the work performed by the other auditors to date.

c. Outline the action you would take in relation to those issues identified in (b).