1.3: Compliance & Substantive Testing (Doshi)

Question 1

Compliance Testing

Answer 1

Involves verification of process

Question 2

Substantive Testing

Answer 2

Involves verification of data or transactions

Question 3

Compliance Testing checks for:

Answer 3

Compliance Testing checks for the presence of controls.

Question 4

Substantive Testing checks for:

Answer 4

Substantive Testing checks for completeness, accuracy and validity of the data.

Question 5

What sample method is used for compliance testing?

Answer 5

Attribute sampling

Question 6

What sampling method is used for substantive testing?

Answer 6

Variable Testing

Question 7

What testing method is used to verify configuration of router for controls?

Answer 7

Compliance testing

Question 8

What testing method is used for Physical inventory of tapes at the offsite storage location?

Answer 8

Substantive testing

Question 9

In any given scenario, what are the order for testing?

Answer 9

Compliance testing will be performed first. Substantive testing will be the next step

Question 10

What forms the basis for planning of substantive testing?

Answer 10

The outcome/result of compliance testing

Question 11

What testing should be used to verify systems access rights?

A. Substantive testing
B. Compliance testing

Answer 11

B. Compliance testing

Question 12

What testing should be used for review of firewall settings?

A. Compliance testing
B. Substantive testing

Answer 12

A. Compliance testing

Question 13

What testing should be used to confirm the validity of inventory valuation calculations?

A. Compliance testing
B. Substantive testing

Answer 13

B. Substantive testing

Question 14

What testing should be used to conduct a bank confirmation to test ending cash balances?

A. Substantive testing
B. Compliance testing

Answer 14

A. Substantive testing

Question 15

What testing should be used for examining trial balance and other financial statements?

A. Compliance testing
B. Substantive testing

Answer 15

B. Substantive testing

Question 16

In any given scenario, compliance testing will be performed

Answer 16

FIRST. Substantive testing will be the next step.

Question 17

In any given scenario, compliance testing test

Answer 17

CONTROLS, while substantive testing tests details.

Question 18

In any given scenario, compliance testing checks for the

Answer 18

PRESENCE of CONTROLS whereas substantive testing checks the integrity of contents i.e. test of individual transactions.

Question 19

In any given scenario, outcome/result of compliance testing will form the

Answer 19

BASIS for planning of substantive testing.

For example, if compliance testing indicates strong internal control, substantive testing may be waived off or reduced. In case compliance testing indicates weak internal controls then substantive testing to be more rigorous. The development of substantive tests is often dependent on the outcome of compliance tests.

Question 20

In any given scenario, attribute sampling method (either control is present or absent) will be

Answer 20

useful when testing for compliance.