Substantive Credibility Tests: What action should I take where a trader fails certain credibility tests?
Where a credibility test fails, it doesn’t always follow that there is something wrong with the business. You should carefully assess the risk indicated by the result and use further tests and audit techniques to evaluate whether there is any need or justification for any further courses of action, such as implementing sanctions. Certainly before any civil action is implemented you should be able to show that on balance of probability such action is justified. Unusual results from credibility tests are more likely to trigger further assurance activity, rather than lead directly to sanctions.