Final answer:
True, when other auditors qualify their audit, the principal auditor must assess materiality of the qualified portion in relation to the whole financial statements and report accordingly.
Step-by-step explanation:
The question refers to a scenario in audit practices where multiple auditors are involved and a portion of the audit is qualified by one of them.
The statement is true; when other auditors qualify their portion of the audit, the principal auditor must determine if the qualified amount is material to the financial statements as a whole. If the amount is material, the principal auditor must reflect this materiality in the audit report, potentially qualifying it as well.
For example, if a specialist auditor is hired to audit a complex financial instrument and discovers an issue that could materially misstate the financial statements, the principal auditor must consider this information when forming the overall audit opinion. The principal auditor assess the materiality in the context of the whole financial statements and ensure that the users of the financial statements are informed about the implications of the qualified audit report content from the other auditor.