$1.$Assume that the client does not intend to record any of the above misstatements and that $4\mathrm{.}0$ percent of income after taxes is considered a material misstatement.

Provide the auditor's conclusion in this situation. Only consider the income effect.

$2.$ Assume that the client does intends to record correcting entries for each above misstatement.

Provide the auditor's conclusion in this situation.