Final answer:
Option 4, where 'premises are inadequate to support the conclusion', would not form a valid basis for reducing substantive testing, as auditors need a high level of assurance about the accuracy of financial statements.
Step-by-step explanation:
The question asks which of the provided options would not be a valid basis for an auditor to reduce substantive testing. Substantive testing is an audit procedure that examines the financial statements and supporting documents to check for errors or fraud. For an auditor to reduce the level of substantive testing, there should be a high level of assurance that the financial statements are accurate.
Option 4, where premises are inadequate to support the conclusion, would not provide a valid basis for an auditor to reduce substantive testing. In fact, this situation would likely lead an auditor to perform more substantive testing to gather enough evidence to support the conclusions.
Option 5 suggests that alternative arguments exist with equal or greater support. If alternative arguments or explanations are equally supported, an auditor may consider whether the presence of such alternatives would impact the degree of substantive testing needed.