What type of testing would be most appropriate for an auditor assessing control risk at a low level?

When an auditor assesses control risk at a low level, it indicates that the internal controls are considered to be effective and reliable. In this scenario, the most appropriate approach is to perform tests of controls. This involves evaluating the design and operating effectiveness of the client’s internal controls to ensure they are functioning as intended.

By conducting tests of controls, the auditor can gain assurance that the controls are effective in preventing or detecting material misstatements in the financial statements. Limited tests of current year transactions may also be included to confirm that the controls are applied consistently and are still effective in the current reporting period. As a result, option C reflects the appropriate auditing approach for a low control risk assessment, balancing the need to test the internal controls while also considering recent transactions.

In contrast, relying solely on substantive testing would not be the best strategy here, as it might overlook the effectiveness of established controls. Risk assessment procedures alone would not provide sufficient evidence of control effectiveness, while exclusive reliance on analytical procedures wouldn’t adequately validate the internal controls' effectiveness either. Therefore, combining tests of controls with ongoing transaction testing aligns with the auditor’s goal of ensuring that low control risk is substantiated with appropriate evidence.