Auditing and Attestation- Certified Public Accountant (CPA) Practice Exam -

What should the auditor's report reference regarding the U.S. as the country of origin?

1. Only the accounting principles used.

2. Only the auditing standards used in the audit.

3. Both the accounting principles and the auditing standards.

4. Neither the accounting principles nor the auditing standards.

The correct answer is: Only the accounting principles used.

The auditor's report is an important document that communicates the findings and conclusions of the audit. When referring to the U.S. as the country of origin, it is essential to note that the report should reference the accounting principles used in the preparation of the financial statements. This is because U.S. Generally Accepted Accounting Principles (GAAP) are specific to the U.S. and must be adhered to for the statements to be considered compliant. The auditing standards, while relevant to the audit process itself, do not necessarily need to be referenced in terms of the country of origin. However, it is crucial that the auditor follows the appropriate auditing standards, such as those set by the Public Company Accounting Oversight Board (PCAOB) for audits in the U.S., but this does not specifically tie to the mention of the country of origin in the auditor's report. Thus, the correct choice emphasizes the importance of identifying the accounting principles as they relate to the U.S., ensuring users of the financial statements understand the framework under which the financial information was prepared.