Final answer:
The least likely appropriate auditor response to the absence of required approvals in cash disbursement transactions is to increase the planned detection risk, as this would reduce scrutiny when evidence suggests it should be heightened. Communication with governance and more extensive substantive tests are more appropriate actions.
Step-by-step explanation:
When an auditor's tests of controls reveal that required approvals of cash disbursements were absent for a large number of sample transactions, the least appropriate auditor response from the options provided would be to increase the planned detection risk. Detection risk is the risk that the auditor will not detect a material misstatement that exists in an assertion. Increasing the planned detection risk is counter-intuitive because the auditor has already found evidence of control weaknesses, signaling a need for greater, not lesser, scrutiny. Instead, the auditor should communicate the deficiency to those charged with governance as option (1) suggests. Moreover, option (4) to perform more extensive substantive tests surrounding cash disbursements is an expected response when control weaknesses are detected, to ensure that the financial statements are free of material misstatement. Contrary to option (3), the auditor may indeed decide to select more sample items to audit if initial results indicate potential broader issues in the control environment.