23. Which of the following is an example of a material accounting change that requires recognition in an unmodified opinion on the entity's financial statements? A. A change in the estimate of useful lives used to depreciate property, plant and equipment B. A change in the entity's form of reporting entity C. Management has changed from one generally accepted accounting principle to another but has not provided reasonable justification D. A change from an accounting principle that conforms with GAAP to one that does not 24) Which represents the most significant risk associated with restructuring liabilities on the financial statements? a. Understatement of assets in the period of recording the liabilities. b. Future smoothing of income by releasing the reserves. c. Related party transactions that are not recorded at arms-length. d. Payroll liabilities that are not disclosed in the notes. 25. For which of the following objectives would auditors be least likely to use analytical procedures near the end of the audit? A) Obtaining evidence about assertions related to account balances or classes of transactions B) Evaluating the adequacy of evidence gathered in response to unexpected account balances C) Identifying unusual or unexpected account balances or relationships among account balances that were not previously identified during the audit D) Evaluating the adequacy of evidence gathered in response to unexpected relationships among account balances 26. Which party should request a letter regarding litigation, claims, and assessments from the client's attorney? A) Attorney B) Auditors C) Client D) Securities and Exchange Commission or other regulatory body 27. Why is it the client's decision to record adjustments to the financial statements? A) Having auditors adjust the financial statements would impair independence with respect to the client. B) The financial statements are the responsibility of the client's management. C) Auditors often do not have sufficient client-specific expertise to record adjustments to the financial statements. D) The client will ultimately suffer any losses related to misstated financial statements. 28. An auditor may express an opinion on an entitys accounts receivable balance even if the auditor has disclaimed an opinion on the financial statements taken as a whole provided the: a) Report on accounts receivable discloses the reason for the disclaimer of opinion on the financial statements. b) Use of the report on accounts receivable is restricted to internal use only! c) Auditor also reports on the current asset portion of the entitys balance sheet. d) Report on accounts receivable is presented separately from the disclaimer of opinion on the financial statements. 29. Following the audit report release date, auditors became aware of facts existing at the report date that would have affected the reports had auditors then been aware of such facts. What is the most appropriate initial course of action that auditors should take? A) Determine whether there are persons relying or likely to rely on the financial statements who would attach importance to the information. B) Request that management disclose the newly discovered information by issuing revised financial statements. C) Issue revised pro forma financial statements taking into consideration the newly discovered information. D) Give public notice that auditors are no longer associated with financial statements.