True or False: In auditing, substantive testing is primarily used to check whether a company's internal controls are operating effectively.

Answer options:

True

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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Practice the full ACCA BT — Business & Technology Practice Exam 5

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