I’m wondering if TOC can be included as some of the answer for audit response?
Eg: audit risk – Inventory could be under or overstated if the continuous (perpetual) inventory counts are not complete and the inventory records accurately updated for adjustments.
Audit response – Observe the process of inventory counting and process of adjusting inventory record to ensure procedure is adhered to and quantity is recorded accurately.
Yes. That is fine. Audit risk can be reduced either by ensuring internal controls are operating well (low control risk) or the auditors performing lots of substantive tests (to lower detection risk).