Final answer:
When internal controls are strong, the auditor may be able to conduct less substantive testing due to reduced risk of material misstatements. Auditors still need to assess internal controls and perform some substantive testing to collect adequate audit evidence.
Step-by-step explanation:
auWhen internal controls are strong, the appropriate response is that theditor may be able to conduct less substantive testing. Effective internal controls reduce the risk of material misstatements in financial reporting. As a result, auditors can rely more on the controls, and perform fewer detailed transactions and balance verifications. However, this does not imply that the auditor can forego the assessment of internal controls or issue an unmodified opinion solely based on the strength of the internal controls
Auditors are required to understand and test internal control systems as part of an audit, but if those controls are robust, the extent of substantive testing necessary to form an audit opinion may be reduced. It's essential to note that despite strong internal controls, auditors must still perform some substantive testing to gather sufficient audit evidence.