diff --git a/flang/lib/Evaluate/check-expression.cpp b/flang/lib/Evaluate/check-expression.cpp
--- a/flang/lib/Evaluate/check-expression.cpp
+++ b/flang/lib/Evaluate/check-expression.cpp
@@ -526,18 +526,14 @@
       } else {
         return "dummy procedure argument";
       }
+    } else if (&symbol.owner() != &scope_ || &ultimate.owner() != &scope_) {
+      return std::nullopt; // host association is in play
     } else if (const auto *object{
                    ultimate.detailsIf<semantics::ObjectEntityDetails>()}) {
       if (object->commonBlock()) {
         return std::nullopt;
       }
     }
-    for (const semantics::Scope *s{&scope_}; !s->IsGlobal();) {
-      s = &s->parent();
-      if (s == &ultimate.owner()) {
-        return std::nullopt;
-      }
-    }
     return "reference to local entity '"s + ultimate.name().ToString() + "'";
   }
 
diff --git a/flang/lib/Semantics/check-declarations.cpp b/flang/lib/Semantics/check-declarations.cpp
--- a/flang/lib/Semantics/check-declarations.cpp
+++ b/flang/lib/Semantics/check-declarations.cpp
@@ -34,7 +34,6 @@
 class CheckHelper {
 public:
   explicit CheckHelper(SemanticsContext &c) : context_{c} {}
-  CheckHelper(SemanticsContext &c, const Scope &s) : context_{c}, scope_{&s} {}
 
   SemanticsContext &context() { return context_; }
   void Check() { Check(context_.globalScope()); }
diff --git a/flang/test/Semantics/resolve69.f90 b/flang/test/Semantics/resolve69.f90
--- a/flang/test/Semantics/resolve69.f90
+++ b/flang/test/Semantics/resolve69.f90
@@ -64,3 +64,15 @@
   line%value = 'ok'
   Print *,Trim(line%value)
 End Program
+
+!Not errors.
+subroutine outer
+  integer n
+ contains
+  character(n) function inner1()
+    inner1 = ''
+  end function inner1
+  function inner2()
+    real inner2(n)
+  end function inner2
+end subroutine outer