Choice "B" is correct. If the financial statements of a prior period have been audited by a predecessor auditor whose report is not presented, the successor auditor should indicate in an other-matter paragraph of the audit report (1) that the financial statements of the prior period were audited by a predecessor auditor, (2) the type of opinion expressed by the predecessor auditor and, if the opinion was modified, the reasons for the modification, (3) the nature of any emphasis-of-matter or other-matter paragraph included in the predecessor auditor's report, and (4) the date of the predecessor auditor's report.
Choice "d" is incorrect. The predecessor auditor, not the client, may reissue the previous year's audit report.
Choice "a" is incorrect. An audit report would indicate a division of responsibility when the principal auditor's opinion is based in part on the report of another auditor.
Choice "c" is incorrect. If the prior year's financial statements are issued, the previous year's audit opinion must also be disclosed.