Statement 1: When both inherent and control risks are low, the overall risk of material misstatement is also low. No reliance is placed on control hence no need to test controls but a high level of substantive tests is required. Statement 2: When both inherent and control risks are high, the overall risk of material misstatement is also high. Hence, further testing of controls is performed to firm up the audit conclusion reached together with a low level of substantive tests. Time Rur Attempt 1 Ho • Statement 1 is true; statement 2 is false • Both statements are true • Both statements are false • Statement 1 is false; statement 2 is true