ExpertEasy1 markMultiple Choice
ACCA · Question 38 · Syllabus C: Business functions, regulation and technology
True or False: In auditing, substantive testing is primarily used to check whether a company's internal controls are operating effectively.
True or False: In auditing, substantive testing is primarily used to check whether a company's internal controls are operating effectively.
Answer options:
A.
True
B.
False
How to approach this question
Differentiate between testing the *process* (controls) and testing the *numbers* (substantive).
Full Answer
B.False✓ Correct
Tests of controls (compliance testing) evaluate the effectiveness of internal controls. Substantive testing involves gathering evidence to verify the actual amounts and disclosures in the financial statements.
Common mistakes
Confusing substantive testing with tests of controls.
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