Your friend, Han Oh, has recently began working for an auditing firm and he wants your advice regarding some tests of sales transactions that he is currently undertaking with respect to one of his clients. Han selected a haphazard sample of 20 sales with a total book value of $150,000. In his sample, he found a total of $1,000 in net overstatement errors. The total sales balance per books is $40 million. Overall materiality for the engagement is $600,000. Tolerable error for sales is $140,000.

Required

a. What kind of testing is Han performing- compliance or substantive?

b, Could Han safely conclude that no additional audit work is needed in this area? Support your answer.