Final answer:
When an auditor does not receive a reply to a positive request for a year-end accounts receivable confirmation, they should follow up with a second and sometimes a third request to ensure that the confirmation is received. Increasing the assessed level of detection risk or inherent risk is not the appropriate action in this situation.
Step-by-step explanation:
When an auditor does not receive a reply to a positive request for a year-end accounts receivable confirmation, the auditor most likely would follow up with a second and sometimes a third request. This is done to ensure that the confirmation is received and that the auditor has obtained sufficient appropriate audit evidence.
Increasing the assessed level of detection risk for the valuation and completeness assertions is not the appropriate action in this situation. This would mean that the auditor is willing to accept a higher risk of not detecting material misstatements in the financial statements.
Inspecting the allowance account to verify whether the accounts were subsequently written off may not provide sufficient evidence on the confirmation itself and may not directly address the issue of non-response to the confirmation request.
Increasing the assessed level of inherent risk for the revenue cycle may be considered if there are other risk factors that indicate a higher likelihood of material misstatements in the revenue cycle, but it is not directly related to the non-response to the confirmation.