incorrect. If the omitted audit procedure impairs the auditor's ability to support the opinion, no
other procedures compensated for the missing one, and there were persons relying (or likely to
rely) on the financial statements, the auditor would need to apply substantive procedures.
Taking no action would not be an acceptable response. Reporting on Other Information
QUESTION: 100
Which of the following is not true regarding an engagement to provide a written report on the
application of accounting principles?

A. An accountant is prohibited from providing a report on the application of accounting principles
to a transaction not involving the facts and circumstances of a specific entity.
B. The accountant's written report on the application of accounting principles should include an
identification of the specific entity involved.
C. An accountant is prohibited from providing a report on the application of accounting principles
to a proposed future transaction involving the facts and circumstances of a specific entity.
D. The accountant's written report on the application of accounting principles should include a
paragraph restricting the use of the report.

Answer(s): C
Explanation:
Choice "c" is correct. An accountant may report on the application of accounting principles to a
proposed future transaction as long as the transaction involves the facts and circumstances of a
specific entity. Choice "a" is incorrect. An accountant is prohibited from providing a report on the
application of accounting principles to "hypothetical transactions," which are defined as those
not involving the facts and circumstances of a specific entity. Choices "b" and "d" are incorrect.
The accountant's written report on the application of accounting principles should include an
identification of the specific entity involved, a description of the transaction(s), a statement of the
relevant facts, circumstances, and assumptions (and a statement that any changes therein may
change the report), a statement about the source of the information, a statement describing the
appropriate accounting principles or type of opinion that may be rendered, the reasons for the
accountant's conclusions, a statement regarding management's responsibility, and a restrictive
use paragraph.
QUESTION: 101
Before reporting on the financial statements of a U.S. entity that have been prepared in
conformity with another country's accounting principles, an auditor practicing in the U.S. should:

A. Understand the accounting principles generally accepted in the other country.
B. Be certified by the appropriate auditing or accountancy board of the other country.
C. Notify management that the auditor is required to disclaim an opinion on the financial
statements.
D. Receive a waiver from the auditor's state board of accountancy to perform the engagement.

Answer(s): A
Explanation:
Choice "a" is correct. Before reporting on the financial statements of a U.S. entity that have
been prepared in conformity with another country's accounting principles, the auditor practicing
in the U.S. should understand the accounting principles generally accepted in the other country.
Choice "b" is incorrect. The auditor practicing in the U.S. would be able to report on the financial

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