Most Likely Outcome of Compliance Testing

D.

Compliance testing is a type of testing performed by auditors to assess whether an organization is adhering to specific laws, regulations, or policies. The purpose of compliance testing is to determine whether controls are working as intended to ensure compliance and prevent non-compliance with the relevant laws and regulations.

Based on the definition of compliance testing, we can now assess each answer option:

A. Comparison of data with physical counts: This answer option is more likely to result from substantive testing, not compliance testing. Substantive testing is performed to determine whether an account balance or transaction amount is accurate. Compliance testing, on the other hand, is performed to determine whether an organization is following specific laws, regulations, or policies.

B. Confirmation of data with outside sources: This answer option is more likely to result from substantive testing, not compliance testing. Confirmations are a form of substantive testing used to verify the accuracy of account balances or transaction amounts with third-party sources. Compliance testing is not concerned with verifying the accuracy of data but rather with ensuring that an organization is following specific laws, regulations, or policies.

C. Identification of errors due to processing mistakes: This answer option is a possible result of compliance testing. Compliance testing can help identify errors or mistakes made during the processing of data, which may result in non-compliance with relevant laws or regulations. The objective of compliance testing is to ensure that an organization is following specific laws, regulations, or policies, and the identification of processing mistakes can help achieve that objective.

D. Discovery of controls that have not been applied: This answer option is a possible result of compliance testing. Compliance testing can help identify controls that have not been applied, resulting in non-compliance with relevant laws or regulations. The objective of compliance testing is to ensure that an organization is following specific laws, regulations, or policies, and the discovery of controls that have not been applied can help achieve that objective.

In summary, the answer options that are most likely to result from compliance testing are C and D. Compliance testing can help identify errors due to processing mistakes and discover controls that have not been applied, both of which can result in non-compliance with relevant laws or regulations.