Final answer:
When lower acceptable levels of audit risk and materiality are set, auditors should devote more effort to individual accounts to reduce the risk of not identifying significant misstatements.
Step-by-step explanation:
When lower acceptable levels of both audit risk and materiality are established, the auditor should plan more work on individual accounts to mitigate the risk of not detecting material misstatements. This includes performing additional testing and procedures to ensure that the financial statements are free from material errors or fraud.