Final answer:
The correct option is: 1) decreased. When the risk of material misstatement is assessed as low, the detection risk is set at high, leading to a decrease in the level of audit evidence required. Thus, the correct answer is that the level of audit evidence required is decreased.
Step-by-step explanation:
The question pertains to the principles of auditing and the relationship between assessed risk of material misstatement, detection risk, and the level of audit evidence required. In the context of an audit, when an auditor like Luigi Deltorio assesses the risk of material misstatement as low, it means there is less likelihood that there will be significant errors or fraud in the accounts receivable of Bricksburg Corp. that could materially affect the financial statements and go undetected.
Because Luigi has assessed this risk as low, he can accept a higher detection risk. In other words, he's willing to take on a greater risk that his audit procedures might not detect a material misstatement.
As a result, the level of audit evidence required decreases since the overall risk that the auditor will give an inappropriate opinion on the financial statements is still at an acceptable level. The direct consequence is that less evidence is needed to conclude that the financial statements are free of material misstatement.
Therefore, the correct option is: 1) decreased.