BCD Ltd. is engaged in manufacturing of electronic components. During the audit of financial statements for the year ended 31st March 2025, the…

BCD Ltd. is engaged in manufacturing of electronic components. During the audit of financial statements for the year ended 31st March 2025, the auditor assessed the risk of material misstatement at the assertion level for revenue and inventory balances. While designing further audit procedures, the auditor considered whether to perform tests of details, substantive analytical procedures, or a combination of both. The auditor noted that reliable industry data was available and the relationship between sales volume and revenue had historically been predictable. However, certain unusual fluctuations were also observed during the current year. Accordingly, the auditor exercised professional judgment while deciding the nature of substantive procedures to be performed to reduce audit risk at the assertion level to an acceptably low level. Which of the following statements correctly explains the basis for the auditor's decision regarding substantive procedures?