Final answer:
Auditors will use larger sample sizes when inherent risk is high to increase confidence in detecting material misstatements and when detection risk is low to ensure a low level of detection risk through more substantive testing.
Step-by-step explanation:
Auditors will use larger sample sizes when the inherent risk is high and the detection risk is low. When the inherent risk is high, there's a greater chance that material misstatements could be present in the financial statements due to error or fraud. Therefore, auditors need a larger sample size to obtain a more precise understanding of the financial statements and reduce the likelihood of not detecting material misstatements.
Conversely, when the detection risk is low, auditors are willing to rely less on internal controls and perform more substantive testing. This often means selecting larger sample sizes to ensure a low level of detection risk, which increases the confidence that the auditor will detect material misstatements if they exist.