During the audit of Fall Corporation, the auditors, Bayside CPAs have determined that an accounting clerk inadvertently recorded depreciation entries for a certain class of equipment using an incorrect depreciation method. As a result, depreciation expense on the income statement is understated. Based on this finding, which of the following represents the auditor's most appropriate response? The auditors should classify this as a factual misstatement on the basis that the accounting clerk inadvertently used an incorrect depreciation method, and subsequently recorded incorrect entry amounts. The auditors should confirm with the accounting clerk that there was a logical theoretical rationale for the different depreciation entries, and record the responses for inclusion in the current year's audit file. The auditors should classify this as a projected misstatement on the grounds that the client's financial statements are yet to be released to the general public. If the client accepts the auditor's adjusting entries, then no disclosures relating to this should be made in the client's financial statements. The auditors should classify this as a judgmental mistake on the grounds that selection of depreciation methods is subjective and requires judgment on the part of the client's accountants. While working on the audit of Figtree Corporation, the audit firm, Jones CPAs has learned that per the details of a loan covenant associated with a significant loan the client has outstanding, the client is expected to maintain a minimum current ratio of 2:1. The client's current ratio is 1.7:1 at present. As a result of this finding, which of the following represents the auditor's most appropriate. course of action? The auditors should consider categorizing this as a Type ll subsequent event. The auditors should request the client's management make all necessary adjustments and disclosures in the financial statements. The auditors should proceed with issuing either a qualified opinion on this area of the client's financial statements, or consider issuing a disclaimer of opinion to preserve the reputation of the firm. The auditors should consider categorizing this as a Type I subsequent event. Once this determination has been made, the auditors should request management make all necessary changes to the financial statements and should notify the 5EC per generally accepted auditing standards. The auditors should consider categorizing this as a Type I subsequent event. At this juncture, the auditors should request the client's management make all necessary and pertinent disclosures in the financial statements