The correct answer is non-compliant. This is because the Azure Policy definition uses the audit effect to check whether the storage account’s encryption key source is set to Microsoft.Keyvault, and since the storage account uses Microsoft-managed keys, its keySource property is Microsoft.Storage, which fails the policy condition. On the AZ-500 exam, this scenario tests your understanding of how Azure Policy evaluates compliance based on resource properties, not just the effect type—a common trap is assuming that an audit effect means the resource is automatically compliant or that the policy is not enforced. Remember, audit policies flag non-compliance without blocking deployment, so the storage account is still non-compliant even though it functions normally. A helpful memory tip: “Audit doesn’t block, but it still clocks—if keySource isn’t Keyvault, you’re in default.”
AZ-500 Practice Question: Secure Azure using Microsoft Defender for Cloud and Microsoft Sentinel
This AZ-500 practice question tests your understanding of secure azure using microsoft defender for cloud and microsoft sentinel. Match the stated requirement to the specific cloud service, access model, or configuration option — many options are valid in isolation but not for this scenario. After answering, compare your reasoning against the explanation and wrong-answer breakdown below. Once you have made your selection, read the full explanation to reinforce the concept and understand why each distractor is designed to mislead on exam day.
Exhibit
{"properties":{"displayName":"Audit storage accounts with customer-managed keys","policyType":"BuiltIn","mode":"Indexed","description":"Audits storage accounts that do not use customer-managed keys.","metadata":{"version":"1.0.0","category":"Storage"},"parameters":{},"policyRule":{"if":{"field":"type","equals":"Microsoft.Storage/storageAccounts"},"then":{"effect":"audit","details":{"existenceCondition":{"field":"Microsoft.Storage/storageAccounts/encryption.keySource","notEquals":"Microsoft.Keyvault"}}}}}
Refer to the exhibit. You assign this Azure Policy definition to a subscription containing a storage account that uses Microsoft-managed keys. What is the compliance state of the storage account?
{"properties":{"displayName":"Audit storage accounts with customer-managed keys","policyType":"BuiltIn","mode":"Indexed","description":"Audits storage accounts that do not use customer-managed keys.","metadata":{"version":"1.0.0","category":"Storage"},"parameters":{},"policyRule":{"if":{"field":"type","equals":"Microsoft.Storage/storageAccounts"},"then":{"effect":"audit","details":{"existenceCondition":{"field":"Microsoft.Storage/storageAccounts/encryption.keySource","notEquals":"Microsoft.Keyvault"}}}}}
A
Non-compliant
The policy requires keySource = Microsoft.Keyvault; the account has keySource = Microsoft.Storage.
B
Compliant
Why wrong: The account uses Microsoft-managed keys, not customer-managed keys.
C
Not evaluated because the policy is not assigned
Why wrong: The policy is assigned per the scenario.
Answer the question above first, then reveal the full breakdown to understand why each option is right or wrong.
Correct answer & explanation
✓
Non-compliant
Option B is correct because the policy audits storage accounts that do not have keySource = Microsoft.Keyvault. Since the storage account uses Microsoft-managed keys (keySource = Microsoft.Storage), it is non-compliant. Option A is wrong because it is non-compliant. Option C is wrong because the policy is an audit effect, not deny. Option D is wrong because the policy is assigned and evaluated.
Key principle: ACLs process entries top to bottom and stop at the first match. Entry order and interface direction matter as much as the permit or deny statement.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
✓
Non-compliant
Why this is correct
The policy requires keySource = Microsoft.Keyvault; the account has keySource = Microsoft.Storage.
Related concept
Standard ACLs match source addresses.
✗
Compliant
Why it's wrong here
The account uses Microsoft-managed keys, not customer-managed keys.
✗
Not evaluated because the policy is not assigned
Why it's wrong here
The policy is assigned per the scenario.
✗
Error: Policy effect 'audit' not supported
Why it's wrong here
Audit effect is supported.
Common exam traps
Common exam trap: ACLs stop at the first match
ACLs are processed top to bottom. The first matching entry wins, and an implicit deny usually exists at the end.
Trap categories for this question
Scenario analysis trap
The policy is assigned per the scenario.
Detailed technical explanation
How to think about this question
ACL questions test precision: source, destination, protocol, port and direction. A generally correct ACL can still fail if it is applied on the wrong interface or in the wrong direction.
KKey Concepts to Remember
Standard ACLs match source addresses.
Extended ACLs can match source, destination, protocol and ports.
The first matching ACL entry is used.
There is usually an implicit deny at the end.
TExam Day Tips
→Check inbound versus outbound direction.
→Read the ACL from top to bottom.
→Look for a broader permit or deny above the intended line.
Key takeaway
ACLs process entries top to bottom and stop at the first match. Entry order and interface direction matter as much as the permit or deny statement.
Real-world example
How this comes up in practice
A media company stores terabytes of video archives that are accessed once a year for audit purposes. Moving these objects to a cold storage tier (Azure Archive, S3 Glacier, or Google Nearline) costs a fraction of hot storage. Questions like this test whether you understand storage tiers, access frequency tradeoffs, and retrieval latency requirements.
Related glossary terms
Concepts from this question explained
These glossary pages explain the core terms tested in this AZ-500 question in full detail.
Review ACL processing order, placement rules (standard near destination, extended near source), and inbound vs outbound direction. Study wildcard masks and implicit deny. Then practise related AZ-500 ACL questions on filtering logic and placement.
Secure Azure using Microsoft Defender for Cloud and Microsoft Sentinel — This question tests Secure Azure using Microsoft Defender for Cloud and Microsoft Sentinel — Standard ACLs match source addresses..
What is the correct answer to this question?
The correct answer is: Non-compliant — Option B is correct because the policy audits storage accounts that do not have keySource = Microsoft.Keyvault. Since the storage account uses Microsoft-managed keys (keySource = Microsoft.Storage), it is non-compliant. Option A is wrong because it is non-compliant. Option C is wrong because the policy is an audit effect, not deny. Option D is wrong because the policy is assigned and evaluated.
What should I do if I get this AZ-500 question wrong?
Review ACL processing order, placement rules (standard near destination, extended near source), and inbound vs outbound direction. Study wildcard masks and implicit deny. Then practise related AZ-500 ACL questions on filtering logic and placement.
What is the key concept behind this question?
Standard ACLs match source addresses.
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