Colin and Derek are discussing internal controls, and how those controls relate to the financial statement audit. Colin explains to Derek about integrated audits for public companies. Derek inquires of Colin as to how an auditor determines the appropriate mix of internal control and substantive testing. Which of the following represents Colin's best response to this question?

The determination of substantive testing will be driven by the auditor's assessment of the effectiveness of internal control. If internal control is effective, the auditor can increase substantive testing.

The balance of internal control testing versus substantive testing is subjectively determined by the auditor. If the auditor assesses internal controls as more reliable, less substantive testing may be performed.

The determination as to the extent of internal control testing and substantive testing is set forth in generally accepted auditing standards. The auditor simply needs to follow those.

None of these answer choices are correct.