B is corrent because increases in the assessed level of risk of material misstatement lead to decreases in the acceptable level of detection risk. Accordingly, the auditor will need to increase the extent of substantive tests such as tests of details.
A is incorrect because tests of controls are performed to reduce the assessed level of control risk only when control procedures are believed to be effective.
C is incorrect because the level of detection risk must be decreased, not increased.
D is incorrect because the level of inherent risk pertains to the susceptibility of an account to material misstatement independent of related internal control structure procedures.
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