Final answer:
Abbot, CPA, should either take full responsibility for the work of the other auditor without mention in the audit report if the qualification is deemed immaterial, or ensure that the qualification is properly disclosed in the financial statement.
Step-by-step explanation:
If Abbot, CPA, as the principal auditor for consolidated financial statements, is using a report from another auditor and has determined that the qualification is not material to the consolidated financial statements, and Abbot is willing to accept responsibility for the work of the other auditor, there are specific guidelines to follow according to auditing standards.
Abbot must make a decision whether to make reference to the other auditor's report or not. If Abbot chooses not to refer to the other auditor's work, his audit report will not mention the other auditor, and he will issue an unmodified (unqualified) opinion on the consolidated financial statements as if he had audited everything himself. However, this implies that Abbot accepts full responsibility for the other auditor's work, as it affects the audit of the consolidated statements.
If Abbot considers the qualification to be relevant but not material to the consolidated statements, and still wishes not to refer to the other auditor's qualified opinion, he should ensure that adequate disclosures are made in the notes of the financial statements without acknowledging the other auditor in his report. It is also important that the qualification has been appropriately addressed in the consolidated statements footnote disclosures.